Preamble

The House met at half-past Two o'clock

PRAYERS

[Mr. SPEAKER in the Chair]

Oral Answers to Questions — TRADE AND COMMERCE

Airdrie (Advance Factory)

Mr. Dempsey: asked the President of the Board of Trade, in view of the consistently high level of unemployment in Coatbridge and Airdrie, if he will have an advance factory built in Airdrie.

The Parliamentary Secretary to the Board of Trade (Mr. Niall Macpherson): No, Sir: the Board of Trade has recently built one advance factory at Coatbridge and my right hon. Friend does not consider that the building of another at Airdrie would be justified in present circumstances.

Mr. Dempsey: Is the Minister aware that figures released over two weeks ago by the Ministry of Labour indicate that we now have the highest level of unemployment in that part of the country since January, 1960? Has not experience demonstrated that the most effective way in which to attract industry, with a view to combating unemployment, is to have an advance factory available so as to induce industrialists to come to this part of the country? Will the Minister, therefore, in view of the experience which we have gained in North Lanarkshire, reconsider his decision and agree to have a factory built in the town of Airdrie?

Mr. Macpherson: I think that the experience to which the hon. Gentleman is referring is that of immediately after the war when factories were very short and hard to come by. It is not necessarily the experience now.

Local Employment Act, 1960

Mr. Grey: asked the President of the Board of Trade (1) if he will give the number of applications for grants in the North-East under the Local Employment Act, 1960; and how many were agreed to;
(2) if he will give the number of applications for grants in the various regions in the country under the Local Employment Act, 1960; and how many were agreed to.

Mr. N. Macpherson: Seventy applications have been received for financial assistance under Sections 3 and 4 of the Local Employment Act for projects in the Board of Trade's northern region. Twenty-four offers have been made and 19 cases are under consideration. The corresponding figures for Great Britain as a whole are 571, 221 and 86 respectively.
I am circulating the figures for Scotland, Wales and the separate regions in England in the OFFICIAL REPORT.

Mr. Grey: Is the Parliamentary Secretary aware of the growing opinion in the North-East that the Local Employment Act is a form of cheat legislation, proof of which lies in the fact that far too many applications have been turned down, and that far too many people are puzzled at some of the decisions of the Board of Trade Advisory Committee? Is the hon. Gentleman also aware that I have a case in my constituency where a grant has been turned down and have evidence of another one where nearly two years ago an application was made for a grant for a factory and where, on the advice of the Board of Trade, the people concerned formed themselves into a new company to carry out the project, and that, after doing all this and submitting all the details, including forward estimates for three years, there is no grant available at the end? Surely something else could be done to carry out the spirit of the Act?

Mr. Macpherson: It is a fact that so far more applications have been turned down than accepted, but I do not think that this could be described as cheap legislation. [HON. MEMBERS: "Cheat."] I thought that the hon. Gentleman said "cheap". In any case, whether it be cheap or cheat, even in the northern region the total assistance offered to these 24 successful applicants amounts to more than £½ million.

Following is the information:


FINANCIAL ASSISTANCE UNDER SECTIONS 3 AND 4 OF THE LOCAL EMPLOYMENT ACT, 1ST APRIL, 1960 TO 9TH NOVEMBER, 1961


Board of Trade Office area
Number of applications received
Number of offers made
Number of applications under consideration or awaiting information


ENGLAND:


Northern Region
70
24
19


North Eastern Region
6
3
2


Eastern Region
6
3
—


London and South Eastern Region
48
19
—


South Western Region
60
23
9


Midland Region
—
—
—


North Western Region
56
30
5



246
102
35


SCOTLAND
246
96
40


WALES
79
23
11

Bishop Auckland

Mr. Boyden: asked the President of the Board of Trade how many jobs which were in prospect in December, 1960, have now materialised in the Bishop Auckland constituency; how many are held by men; and where such jobs are to be found.

Mr. N. Macpherson: Between November, 1960, and August, 1961, the latest date for which the information is available, expanding firms in the hon. Member's constituency increased their total employment by some 190, including about 65 males. Since these figures are based on information obtained in confidence from individual firms, I cannot give the hon. Member further details.

Mr. Boyden: As the Parliamentary Secretary knows, this is most unsatisfactory. I have in my hand the latest figures from the Ministry of Labour. There are practically 1,500 men and boys out of work in the Bishop Auckland travel-to-work area. This is practically the same position as it was two years ago. The hon. Gentleman discussed the Fielden Bridge site in my constituency. He knows the situation. Cannot he make a big effort there to get roads built and the general area tidied up so that the site may be more attractive to industry? Up to the moment, nothing at all has happened in my constituency.

Mr. Macpherson: There are 840 jobs in prospect against 1,463 unemployed at the present time, so that it is not true to say that nothing has happened. I will take note of what the hon. Gentleman has said and keep it under review.

Motor Car Exports

Mr. F. Noel-Baker: asked the President of the Board of Trade how the figures for British car exports for the first ten months of this year compare with those for the first ten months of last year.

The Minister of State, Board of Trade (Sir Keith Joseph): This information is available from the October issue of the Trade and Navigation Accounts.

Mr. Noel-Baker: Would the Minister like to make any comment on the serious position which these figures reveal, in spite of an improvement in the last few weeks? He will be aware that the total is down by 37·9 per cent., that in the United States it is down by 83·5 per cent., in Canada by 53·2 per cent. and in the remainder of the Commonwealth by 18·4 per cent. These are very bad figures indeed. What is the Department doing to assist and persuade the motor industry to improve its export performance?

Sir K. Joseph: The fall in exports is, of course, of great concern, not only to the Government, but to the industry. With the help of my right hon. Friend's Department, manufacturers are making


special efforts to recover lost ground in export markets and the latest figures, to which the hon. Member has referred, give grounds for a little hope.

Mr. Edelman: Will the Minister confirm that in the United States, exports fell in the first nine months of this year to something like 15,000, compared with 127,000 last year? Despite the apparent improvement in the market due to the excellent performance of the specialist cars, is there not a long way to go before we can re-establish the situation in which the bread and butter of the motor industry—the cars of medium size and medium price—can be successfully exported to the United States?

Sir K. Joseph: All that is true, but it is also true that the main manufacturers are mounting greatly increased efforts in the United States.

Mr. Cleaver: Is my hon. Friend aware that the total exports of this industry for the first nine months of this year amounted to £430 million? Ought not the industry to be congratulated, acting, as it is, under very difficult conditions?

Fife

Mr. W. Hamilton: asked the President of the Board of Trade how much financial assistance has been given or offered to industrialists wishing to come to Fife under the terms of the Local Employment Act.

Mr. N. Macpherson: I regret that I cannot give this information, since the offers made to individual firms could be deduced from it. Such offers are confidential. But I can say that the projects in question are expected to provide over 800 jobs.

Mr. Hamilton: Can the hon. Gentleman say how many jobs have already been created since the inception of the Local Employment Act and as a direct result of it? Can he undertake to make representations to the President of the Board of Trade to pay particular attention to an application which is currently under discussion and about which I saw him last week? The Minister recognises, does he not, that the firm in question had what was, on the surface, an extremely attractive offer from Ireland

and that if the Board of Trade is not more forthcoming than it has been hitherto with this application, the firm might well be lost to my area, which would be a serious blow to an area which is suffering from a decline in the mining industry?

Mr. Macpherson: In reply to the first part of the question, the jobs so far amount to about 1,100 or 1,200—

Mr. Hamilton: No.

Mr. Macpherson: —including the announcement made at the weekend. With regard to the second part of the question and the case about which the hon. Member was good enough to come to see me, the company can raise the matter again with the Board of Trade Advisory Committee. The actual building grant, however, is, of course, based on the terms of the Act.

Jamaican Cigars (Import)

Mr. Leather: asked the President of the Board of Trade what representations he has received from the Jamaican cigar industry regarding cigar imports; and whether he proposes any measures to assist the import of Jamaican cigars into the United Kingdom.

Sir K. Joseph: My right hon. Friend has received no such representations recently. Jamaican cigars benefit from a duty preference and can be imported into the United Kingdom without restriction.

Mr. Leather: Is my hon. Friend aware that the main competition of this industry comes from Cuba and that the Cuban industry is making determined efforts to make up in this country the business which it has lost in the United States? Will he give the House an assurance that the Board of Trade will do nothing to assist it in those efforts, which could only be at the direct expense of the Jamaican industry?

Sir K. Joseph: I assure my hon. Friend and the House that the Jamaican interests will be strongly borne in mind. The House may like to know that, not precisely, but broadly, Jamaica is holding roughly its proportion of our home market.

Companies (Solicitation of Money Deposits)

Mr. Leather: asked the President of the Board of Trade when he proposes to introduce legislation to regulate companies accepting deposits from the public.

Mr. du Cann: asked the President of the Board of Trade if he will now introduce legislation for the protection of the public in regard to the solicitation of money deposits by companies.

Mr. N. Macpherson: I would refer my hon. Friends to the reply which my right hon. Friend gave to the Question asked on the 21st November by my hon. Friend the Member for Taunton (Mr. du Cann).

Mr. Leather: Is not my hon. Friend aware that the Government gave us a firm promise as long ago as October, 1959, that legislation would be introduced to deal with this point? Is he aware that many of us feel that his Department is making rather heavy weather of it? It is being asked, not to revise the whole Companies Act before the Jenkins Report, but to deal with the one specific point of appealing to the public for deposits. That is where protection is badly needed. Will not my hon. Friend take steps to redeem the Government's promise?

Mr. Macpherson: We have every intention of legislating in this matter as soon as the Parliamentary programme permits.

Mr. du Cann: While acknowledging the complications of this matter, may I ask whether it is not clear that we are running the risk of more small people—the people least able to afford it—losing money while we do not have legislation? We have had this situation for the last three years. Will my hon. Friend kindly look at the matter again and give the House a clear assurance that we can have legislation this Session, because it is so urgently needed?

Mr. Macpherson: No, I cannot go further than what I have already said.

Mr. Jay: Is the Minister aware that many promises made in October, 1959, still remain unfulfilled? Can he at

least tell us today at what date he will be able to give a definite answer to the Questions asked by hon. Members opposite?

Mr. Macpherson: No, Sir. I am not able to say that at present.

Mr. Hirst: Will my hon. Friend amplify his statement to the extent that the undertaking to introduce legislation as soon as the Parliamentary timetable permits is not conditional upon the date of publication of the Jenkins Report?

Mr. Macpherson: It certainly is not conditional on the date of publication of the Jenkins Report.

Tobacco Industry (Monopolies Commission's Report)

Mr. F. Noel-Baker: asked the President of the Board of Trade when Her Majesty's Government will take steps to implement the Monopolies Commission report on the tobacco industry.

Mr. N. Macpherson: My right hon. Friend hopes to make an announcement shortly.

Mr. Noel-Baker: In view of the time which has elapsed since the previous statement, which was made on 5th July, cannot the Minister go a little further than that? Has the industry considered the matter? Has it told the Government whether it proposes to seek to implement the Report of the Royal Commission, which, the hon. Gentleman will recall, made two strong recommendations on issues which, it said, were affecting the public interest? What is the cause of all this delay?

Mr. Macpherson: Consultations with the trade have now been completed and my right hon. Friend is considering his decision.

Motor Car Industry (Industrial Disputes)

Mr. Edelman: asked the President of the Board of Trade his estimate of the loss of exports in the motor industry this year due to industrial disputes; and what action he is taking in order to maintain the level of exports in this industry.

Sir K. Joseph: My right hon. Friend is unable to make an estimate, but there can be no doubt that industrial disputes have led to a loss of motor vehicle exports. I very much welcome the discussion which my right hon. Friend the Minister of Labour is having with leading employers and trade union officials about industrial relations in the industry. The Board of Trade is in close touch with the industry about exports and will continue to give all the assistance it can.

Mr. Edelman: Is it not clear that the dispute at Acton, now entering its thirteenth week, is not only causing great hardship to the people who are concerned, but in itself is a matter of national concern because of its effect on exports? Is it not further the case that the attitude of unconditional surrender which seems to have been taken up can lead only to a hardening of attitudes and leave behind a legacy of bitterness? In view of the fact that nearly 5,000 workers in Coventry are suffering consequentially from the strike at Acton, is it not now time for the Government to intervene in this strike to try to bring the sides together and produce a just settlement which will enable everyone to get back to work and play their proper part in the export drive?

Sir K. Joseph: The hon. Member will know that those questions are not for me; but it is, of course, extremely sad for the country that exports are being lost.

Mr. Cleaver: Would my hon. Friend agree that one of the worst effects of these strikes is the bad reputation that it gives us abroad?

Mr. Lee: Would not the Minister agree that no matter what arrangements have gone wrong at Acton, certainly these men have not broken anything like the number of industrial agreements that the Chancellor of the Exchequer has just broken? When discussing this matter with the Ministry of Labour, will the hon. Gentleman take into consideration that in this instance the President of the A.E.U. has asked the Minister to intervene but that the Minister has said that, because the strike is unofficial, he will not do so? Will not the Minister of State say to his right hon. Friend that it is now becoming such an aggravated dispute that he ought to intervene?

Mr. Speaker: None of this is in the realm of responsibility of this Minister.

Motor Cycle Industry (Exports)

Mr. Edelman: asked the President of the Board of Trade whether his attention has been drawn to the recession in trade within the motor cycle industry; and what action he will take, following his study of the matter, to maintain a satisfactory level of exports by the industry.

Sir K. Joseph: Yes, Sir, there has been a decline in the output of the industry and exports have fallen. The Board of Trade will continue to assist the industry's export efforts in any way it can, but the outcome will depend primarily on the industry.

Mr. Edelman: Will the Minister confirm that production this year is approximately 20 per cent. down? In view of the fact that major redundancy threatens a factory near Coventry and that a factory in Birmingham seems likely to close in the spring, does not this call for urgent action by the Government? Furthermore, what will be the position of this industry if we go into the Common Market and have to face the competition of similar products from Italy, Germany and France?

Sir K. Joseph: It is true that since the post-war peak was reached in 1959, there has been a substantial fall in production and a greater fall in exports this year. The Government's main job, however, is to see that the markets of the world are as open as possible to the products of this industry. They are open subject to tariff. Therefore, the battle is necessarily bound to be on merits, prices, salesmanship and service.

British Goods (Advertisement Overseas)

Mr. Gower: asked the President of the Board of Trade what plans he has for giving greater assistance with a view to increasing the scale of advertisement of British goods overseas; and if he will make a statement.

Sir K. Joseph: Much general publicity is already done for British industry and commerce overseas. Generalised advertising of British goods would not, in my


right hon. Friend's view, which is supported by industry, be of sufficient value to justify the expenditure. It would not be right to use public funds to meet the advertising expenses of individual firms.

Mr. Gower: Is it not a fact that the Board of Trade and the Government give some assistance already? Is it not also a fact that in the matter of overseas advertising this country is falling behind many of our overseas competitors? Is there not a case for stepping up the level of this help?

Sir K. Joseph: My right hon. Friend has the benefit of the advice of experts in this field, and we are now making an examination of individual cases to see whether what my hon. Friend says is true. It is also true that the Export Credits Guarantee Department has special policies whereby any loss incurred on promoting expenses by exporters can be shared, and I think that the Government and their agents are already doing a very great deal in this field.

Mr. Darling: Is not this a case where smaller and medium-sized firms should be encouraged to get together to promote co-operative selling schemes, in which advertising can play an important part?

Sir K. Joseph: I very much agree with that, but the Government cannot force that situation.

International Trade Fairs

Mr. Gower: asked the President of the Board of Trade what plans he has for instituting annual international trade fairs in Great Britain as a contribution to our export drive; and if he will make a statement.

Sir K. Joseph: This is primarily a matter for industry. Many trade fairs take place in Great Britain every year, and they are tending to become more international in character. Any extension of this activity is primarily a matter for industry.

Mr. Gower: Is it not a fact that on both sides of the Iron Curtain, in both Eastern and Western countries, international trade fairs are sponsored and assisted by the Governments of those countries? Is it not also a fact that these fairs result in the assembly in the

countries where they are held of a large number of exhibitors and buyers from all over the world? Would not fairs of that kind be likely to be beneficial to our exports? Should not my hon. Friend and his right hon. Friend be treating the matter with a greater sense of urgency?

Sir K. Joseph: We already have a very large number of fairs in this country, and it is for industry to suggest and arrange increases in them. My right hon. Friend has been able to do what I think is so valuable—to increase dramatically the amount of money available to help industry to show in exhibitions abroad.

Mr. Gower: Is not my hon. Friend aware that in other countries proper buildings and stands are provided on a more ambitious scale than obtains in this country, and also that fairs in this country have hitherto been rather national in character and limited in scope? Will not my hon. Friend look at the matter again?

Sir K. Joseph: There has been a recent Adjournment debate on this subject, and I would refer my hon. Friend to HANSARD of 29th June. There are substantial exhibition buildings in this country, and it is not proven that there is need for further ones.

Anglo-Cuban Trade Agreement

Mr. Russell: asked the President of the Board of Trade if, in the negotiations for the renewal of the Anglo-Cuban Trade Agreement, he will seek to reduce the quota of Cuban tobacco imported into this country in order to assist tobacco growers in Jamaica.

Sir K. Joseph: In considering the future of the Anglo-Cuban Trade Agreement, which expires at the end of this year, my right hon. Friend will take full account of the interests of the Jamaican cigar industry.

Mr. Russell: Is my hon. Friend aware that the preference referred to in the Answer to Question No. 8 is microscopic compared with what it was a few years ago? Will he bear in mind that a halfpenny per cigar is nothing in relation to a price of 4s. or 5s.? Cannot he offer some hope of reducing Cuba's


quota in order to help the Jamaican industry?

Sir K. Joseph: All this will be taken into account, although I think that the preference is about 50 per cent. more than my lion. Friend suggests. We shall certainly bear in mind the interests of Jamaica.

Mr. Snow: While our primary responsibility must be towards Jamaica, is it not a fact that the growers and the poorer elements of the population in Cuba are the victims of an American economic boycott, and should not we give some consideration to these people as well?

Butter (Imports)

Mr. P. Browne: asked the President of the Board of Trade what steps he now proposes to take to prevent the import of butter to this country at prices below the cost of production in the countries of origin.

Sir K. Joseph: My right hon. Friend described the steps the Board of Trade has taken to deal with dumped and subsidised imports of butter in his reply on 2nd November to a Question by my hon. Friend the Member for Meriden (Mr. Matthews). Arrangements have now been made with all save one of the countries aproached to limit their shipments as suggested for the period 1st October, 1961, to 31st March, 1962.
I am sorry to say that the Government of the Republic of Ireland have not felt able to agree to restrict exports to the quantity proposed. We must, therefore, act as indicated by my right hon. Friend on 2nd November and impose an antidumping duty on butter imports from the Republic of Ireland. This duty comes into force tomorrow.
The British Government much regret the need to impose these duties on the produce of a country with whom our trading relations are so close. But the quantities to which we asked the Governments of supplying countries to restrict their exports were an impartial proposal made in the G.A.T.T. and most of the Governments which accepted the scheme did so conditionally on anti-dumping duties being imposed on butter from any country which did not similarly accept it. The scheme, of course, covers only the

six months ending on 31st March, 1962, and we hope that, in the interval, there will be discussions amongst all Governments concerned on a long-term solution.

Mr. Browne: Is my hon. Friend aware that this statement will give great pleasure to the farming industry, and to the milk producers in particular? Now that he has done this, would he not consider taking more urgent action in the case of the dumping of other milk products? I am thinking particularly of the imports of spray milk and the like from other countries at under the cost of production.

Sir K. Joseph: My hon. Friend will know that that is another question.

Weights and Measures Legislation

Mr. Jay: asked the President of the Board of Trade when the Government propose to introduce a Bill on the lines of the Weights and Measures (No. 2) Bill of last Session.

Mr. N. Macpherson: As my right hon. Friend the Leader of the House indicated on 2nd November, we hope it will be possible to introduce the Bill this Session, if sufficient progress is made with the Government's programme.

Mr. Jay: Is the Minister aware that this is a very important Bill, on which many weeks of work were expended by the House of Lords in the last Session? Is he also aware that the Government have produced two Bills, and that he has had over two weeks to answer my Question? Is it not possible to give us a definite statement now that this Bill will be introduced in the present Session?

Mr. Macpherson: No, Sir. I cannot go further than I have stated in my Answer.

West Durham

Mr. Ainsley: asked the President of the Board of Trade if he is aware that in the south-east region of the country, which has 27 per cent. of the population, there were available 45 per cent. of the new jobs created between 1952 and 1959, whereas in West Durham there is a continuing high rate of unemployment; and what steps he now proposes to take to bring new industry to this development area in order to reduce unemployment.

Mr. N. Macpherson: A considerable part of the increase in working population in the south-eastern part of the country in recent years was not related to industrial building projects. The Board of Trade's control over new employment is confined to industrial building exceeding 5,000 sq. ft. My right hon. Friend will continue his efforts to steer industry to west Durham. In that part of the area which is a development district the facilities of the Local Employment Act are available.

Mr. Ainsley: The Parliamentary Secretary acknowledges that greater industrial development has taken place in the south-east region, which is an attraction to workers in other parts of the country, where the basic industries are declining. He has himself paid a fleeting visit to the north-west Durham constituency. Is he aware that two local authorities there expressed their concern that the situation was deteriorating rapidly, and that nothing has come so far as the Advisory Panel is concerned? Is he also aware that I myself have sponsored three local projects which have been turned down, without any reason stated, though they were favourably commented upon by Members from the region and the central office? What is the Minister doing?

Mr. Macpherson: There has also been an increase in the number of insured employees in the County of Durham of 44 per cent., which is roughly in ratio with the populations of the respective parts of the country. As I have already said today, there are a thousand jobs in prospect in the Bishop Auckland development district at the present time.

Mr. Chetwynd: Would the Minister bear in mind the fact that this part of the North-East is typical of the other development districts, but that it seems to be becoming worse off than other regions? In considering the matter, will he bear in mind that this development district represents 13 per cent. of the unemployed in all development districts, that it gets only 6 per cent. of the new factories and only 1·4 per cent. of Government aid in grants and loans?

Mr. Macpherson: We are doing our very best to bring employment, and we are succeeding substantially, especially in the coastal region.

Consumer Protection (Committee's Report)

Mr. Darling: asked the President of the Board of Trade when he expects to receive the Report of the Committee on Consumer Protection.

Mr. N. Macpherson: It is still too soon to set a firm date but I understand that the Committee hopes to submit its report by the second quarter of 1962.

Mr. Darling: Could the hon. Gentleman tell us what use will be made of this report when or if it ever appears? Is he aware that his own party, following the lead of the Labour Party, has produced its own policy for consumer protection without waiting for this report? Is he aware that three Private Members' Bills which are likely to go through will cover much of the subject before the report appears? Is he aware that the Liberal Party will also try to produce a report, so that the right hon. Member for Orkney and Shetland (Mr. Grimond) who leads it can say that it is the party with new ideas? In these circumstances, would it not be better to wind up the Committee and forget about it?

Mr. Macpherson: No, Sir. I think it highly desirable that a lot of people should be giving thought to this matter. It is important that my hon. Friends have produced an unofficial report on it and we await the Molony Committee's report with all the more interest.

Peterlee

Mr. Shinwell: asked the President of the Board of Trade what are his plans for the provision of new industries in the new town of Peterlee and the adjoining district.

Mr. N. Macpherson: My right hon. Friend will continue to do all he can to encourage further industrial development in the Peterlee area, where the facilities of the Local Employment Act are available for new industries and expansion. There are some 200 new jobs in prospect from expansions in the Horden and Haswell Employment Exchange areas.

Mr. Shinwell: Is the hon. Gentleman aware that for the past five years I have had the same Answer every time I have asked similar Questions? Is this due


to failure on my part or heresy on the part of the Government? Is the hon. Gentleman aware that yesterday the Minister told me that at Wingate, a few miles from Peterlee, in the adjoining district a pit which employs a large number of men will be closed down in a few months? What is to be done about that?

Mr. Macpherson: We shall go on attempting to attract industry to these places and showing industrialists suitable places for suitable projects.

Pit Closures

Mr. Mason: asked the President of the Board of Trade if he will consult the Ministry of Power and the National Coal Board to ascertain how much unemployment will be caused by the closure of 200 collieries within the next five years and where it is likely to be most acute, with a view to the immediate preparation of a plan for the direction of industry to those regions to coincide with the closures; and to what extent, as part of a long-term plan, he has considered the need for legislation to ensure continuity of employment and trade in coal-mining areas.

Mr. N. Macpherson: My right hon. Friend the Minister of Power keeps my right hon. Friend informed on matters affecting employment in the mines. As the Minister of Power told the hon. Member on 20th November, he expects that the colliery closures will be effected without giving rise to widespread unemployment. But if high unemployment does result from these closures in any areas, my right hon. Friend will do all he can to steer new industry there. His powers under existing legislation are appropriate for this purpose.

Mr. Mason: Is the hon. Gentleman aware that I am not satisfied with that Answer? Is he aware that in Scotland, Wales, Lancashire and parts of Durham there is bound to be a great deal of unemployment when 200 collieries close down? Is he aware that to wait for a certain degree of unemployment is not a satisfactory way of going about this? Is it not time that the Minister found out exactly where these pits will be closed and to what extent there will be a degree of unemployment, and have

plans ready for alternative industry in those areas to coincide with the closures rather than to take panic measures afterwards?

Mr. Macpherson: As soon as the National Coal Board reaches decisions in these matters, we are informed about them, and the terms of the Local Employment Act enable us to take into account not only existing unemployment but unemployment to be expected, as long as it is going to be high and persistent.

Mr. Mason: What must we do to give the Board of Trade a kick in the pants to do something about this? [HON. MEMBERS: "Oh."] That is rightly strong language. We feel very strongly about it. Two hundred collieries will be closed down with resultant unemployment. The Board of Trade should know exactly where collieries will be closed. We should be told to what extent plans exist and the Board of Trade should do something about it.

Mr. Macpherson: We are aware where collieries are to be closed in every case where a firm decision has already been taken, and we take that into account in the periodic reviews we make of the list of development districts.

Stranraer

Mr. Brewis: asked the President of the Board of Trade what action he is taking to introduce new industries into the Stranraer area of Wigtownshire.

Mr. N. Macpherson: The Board of Trade is continuing to encourage the establishment of new industries in Stranraer. The facilities of the Local Employment Act are available to any firms prepared to provide employment there.

Mr. Brewis: Is my hon. Friend aware of the probable closure of the Ministry of Aviation Scientific Establishment at West Freugh? Would he not think that this is a good chance to get some scientific or technical industry there which could employ the men who will be out of work in the district? Will he look at this matter with a great deal of urgency? Is my hon. Friend further aware that there is not much point in


rendering areas like mine completely depopulated in order to cause congestion in Birmingham and the south of England?

Mr. Macpherson: I have inquired about the closing of the establishment at West Freugh but I am told that no decision has yet been taken. If it is closed I quite agree that the existence of skilled men there will provide a good opportunity for industry to come there.

Exports to China

Mr. Teeling: asked the President of the Board of Trade what were the figures for exports from this country to China for January to June, 1960, and for the same period in 1961; and why the figure in May, 1960, of £4,492,000 fell to £553,800 in May, 1961.

Sir K. Joseph: The figures requested are available from the June, 1961, issue of the Trade and Navigation Accounts. The decline in exports in May, 1961, compared with May, I960, was of a general nature, but was due mainly to lower exports of copper wire rods, wool including tops, and iron and steel.

Mr. Teeling: Is my hon. Friend aware that we were told some time ago that if certain restrictions were removed from trade with Communist China it was certain that we should greatly increase this trade? As far as one can see from the figures which my hon. Friend has mentioned, trade has decreased by an appalling amount in the last year. Can the Board of Trade in any way show us why it is seemingly so uninterested in this?

Sir K. Joseph: Our trade with China has provided us with a surplus over the last three years, and in the last year China has had to devote a very large part of her foreign exchange resources to buy food because of the disastrous harvest.

Mr. Shinwell: Can the hon. Gentleman say whether the reduction in our exports to China is due to political or strategic reasons?

Sir K. Joseph: There is no reduction in exports to China for those reasons. This was, as far as I can see, a relatively freak month in a year when China's foreign exchange resources have been depleted because of her need for food

as a result of the bad harvest. Up to this year we have been doing better trade with China and have had a surplus in our trade with her.

Treaty of Rome

Sir D. Walker-Smith: asked the President of the Board of Trade what changes would be necessary following adherence to the Treaty of Rome in the Restrictive Trade Practices Act, 1956, and the Monopolies and Restrictive Practice Acts, 1948 and 1953.

Mr. N. Macpherson: It is too early to say what changes in the Acts in question will be necessary if the United Kingdom accedes to the Treaty of Rome. Much will depend on the nature of the implementing regulations, which are still to be agreed, and on their practical application.

Sir D. Walker-Smith: Can my hon. Friend say whether there are any directives or regulations under Article 87 of the Treaty of Rome which would call for any amendments of these Acts and if so, in which direction?

Mr. Macpherson: Not to my knowledge. I understand that the regulations are to be considered by the Council of Ministers at the end of this week.

Mr. Oram: Is it not the case that there are considerable divisions among the six members of the Common Market and that they failed to agree on regulations under Article 87 after even four drafts had been prepared? In these circumstances, is there not a danger that there will be a weak compromise since they have only another month in which to come to terms? In view of that, is it not likely that there will be a weakening of our anti-monopoly legislation if we are required to conform with their solution?

Mr. Macpherson: Not necessarily. Unanimity is required in the Council of Ministers on this matter in the first three years of the Treaty. After that a qualified majority is sufficient to reach a decision.

Sir D. Walker-Smith: asked the President of the Board of Trade what changes would be necessary following adherence to the Treaty of Rome in the operative statute law governing trade


marks, patents and registered designs and copyright.

Mr. N. Macpherson: The Treaty of Rome does not specifically regulate these matters. My right hon. Friend understands that the signatory countries are aiming to institute common patents and common trade marks, granted by supranational bodies; but that these will not supersede the present national patents and trade marks which will continue to be available. Similar arrangements may be contemplated for designs. Participation in such arrangements would require legislation, the details of which cannot now be forecast. My right hon. Friend does not expect any changes in the law of copyright.

European Economic Community

Mr. Nabarro: asked the President of the Board of Trade to what extent, ad valorem and in volume, British exports to the countries of the European Economic Community have increased in twelve months to 31st October, 1961, compared with the preceding twelve months; what tariff discrimination against British exports occurred in that period as a result of the increased European Economic Community common external tariff; whether British trade with the Common Market countries is now in balance; and what estimate he has made of the effect of forthcoming tariff reductions by General Agreement on Tariffs and Trade signatories upon British trade with the European Economic Community.

Sir K. Joseph: British exports to the countries of the European Economic Community in the twelve months ending 31st October, 1961, exceeded exports in the preceding twelve months by £86 million, or 17 per cent. No comparable figures of volume are available. During that period there was some increase in discrimination against imports from outside the Community, mainly because of reductions in the Community's internal tariffs. Our trade with the countries of the Community is broadly in balance. It is impossible to assess the effect of any reductions agreed in the tariff negotiations in the G.A.T.T. which are not yet concluded.

Mr. Nabarro: Could my hon. Friend tell us whether the increase of 17 per cent. in British exports to the Common

Market countries was most largely at the expense of Commonwealth trade?

Sir K. Joseph: That is a different question, but, of course, the House will see that our proportions of trade are rising with the more expanding economies which are at the moment in Western Europe.

Mr. Jay: Do not these figures show that the United Kingdom exports to the Six countries are now rising almost as fast as the Six's exports to one another? Does not this put in rather better perspective some of the forecasts made of the huge additional exports we shall get by signing the Treaty of Rome?

Sir K. Joseph: It certainly reflects the growing awareness of British enterprises of the values of these markets.

Mr. Nabarro: Would not my hon. Friend agree that the perspicacity of British exporters in the face of uncertainty about whether Britain will accede to the Treaty of Rome or not is the principal contributory factor in this very significant and satisfactory increase in British exports to Western Europe? Does my hon. Friend agree?

Sir K. Joseph: I have just tried to say that in my reply to the previous supplementary question.

Mr. Nabarro: Jolly good! I wanted to be quite sure about it.

Timber (Tariffs)

Mr. Nabarro: asked the President of the Board of Trade what was the aggregrate value c.i.f. of United Kingdom imports of timber and timber products, excluding finished manufactured goods, during twelve months ended 30th September, 1961, and the aggregate amount of United Kingdom import duty charged on such imports; by how much per cent. and in value such import duty will be reduced as a result of forthcoming lowering of tariffs among countries which are General Agreement on Tariffs and Trade signatories; what loss of revenue is thereby entailed; and to what extent it is the policy of Her Majesty's Government to eliminate timber tariffs for the purpose of lowering building costs in Great Britain and assisting British exports by reduced packaging costs.

Sir K. Joseph: The value of the imports was £186 million. Import duty charged in the year ending 31st July, 1961, was a little over £2 million. The G.A.T.T. negotiations are confidential, so I cannot forecast results. It is not the policy of Her Majesty's Government to initiate changes in the tariff, apart from those made as a result of international negotiations, but we are always ready to consider applications for such changes from representative domestic interests.

Mr. Nabarro: Would my hon. Friend bear in mind that timber is the largest single commodity import, in value, of the United Kingdom, and that as practically all the timber that we bring in is applied either to house building or to the packaging of British exports, it is a wholly out-of-date and fallacious policy to place an import duty upon it? Would not my hon. Friend undertake to examine the timber tariffs carefully and individually with a view to securing their elimination?

Sir K. Joseph: But the timber used for the purposes mentioned by my hon. Friend is softwood, the value of the tariffs on which is under a half of 1 per cent., so it cannot enter significantly into costs. The hardwoods which are imported come to a large extent from the Commonwealth and enter duty-free.

Textiles and Clothing

Mr. Ginsburg: asked the President of the Board of Trade what was the percentage change in net new orders for textiles and clothing for July and August, 1961, compared with the average monthly figure for net new orders in 1959; and if he will give a similar comparison for the woollen industry alone.

Mr. N. Macpherson: There was a fall of 37 per cent.; compared with July and August, 1959, the fall was 26 per cent. With regard to the second part of the Question, statistics of orders are supplied voluntarily to my Department on the understanding that information about individual industries will not be disclosed.

Mr. Ginsburg: Is not this a rather serious decline? Is the hon. Gentleman aware of the growing anxiety in certain sections of the wool textile industry?

Will he not agree that the Chancellor's action in limiting the demand is having a very serious effect upon that industry?

Mr. Macpherson: In point of fact, the hon. Gentleman asked about July and August, but at the end of August, 1961, orders on hand were much the same as at the end of August, 1959. Order books are a rather misleading guide to future production.

Cotton Industry (Re-equipment Grants)

Mrs. Castle: asked the President of the Board of Trade what will be the cost to the Treasury of valid applications to date for re-equipment grants under the Cotton Industry Act, 1959; and what was the reason for altering the final date for the receipt of applications from 8th July, 1962, to 8th July, 1963.

Mr. N. Macpherson: My right hon. Friend is informed that to date the Cotton Board has received applications covering expenditure, incurred or proposed, to the amount of £34·3 million; assuming all these projects go ahead, the Government's contribution will be about £8·6 million. The final date for the receipt of applications remains at 8th July, 1962. The date by which orders must be placed with manufacturers has been put back to 8th July, 1963, so as to give applicants more time.

Mrs. Castle: But does not this very low figure of 8·6 per cent. for re-equipment grants show that the estimates made of the demand for these grants at the time the Bill was before the House have not been fulfilled and that, therefore, the re-equipment scheme is sadly lagging behind the hopes? In view of the very serious spread of short-time working in areas like Blackburn and the rest of Lancashire, could the hon. Gentleman tell the House what plans his right hon. Friend has for dealing with the crisis in the cotton industry?

Mr. Macpherson: The re-equipment so far is not as high as we had hoped, but there still is some time left. I think that the hon. Lady misunderstood my figure. The Government's contribution will be £8·6 million. It is not a question of 8·6 per cent. As to the future, there is still some time to go. This is the scheme which the Government have


made in order to encourage the cotton industry, and we hope that the cotton industry will take advantage of it.

Mrs. Castle: I did not misunderstand the hon. Gentleman. Is it not a fact that when the Bill was before the House the Government estimated that the re-equipment grants would total at least £20 million? Is not this £8·6 million in applications for grant seriously below that figure, and does it not reflect the growing breakdown of morale in the cotton industry due to the crisis there? What is the hon. Gentleman going to do about it?

Mr. Macpherson: As I have said, there is still some time to go, and we hope that the figures will increase. Owing to the situation which has arisen from the point of view of imports in the past few months, there has undoubtedly been some decline in the confidence of the industry, but there is still time for it to pick up.

Oral Answers to Questions — COMMONWEALTH IMMIGRANTS BILL

Mr. Chapman: asked the Prime Minister whether in view of protests from the Commonwealth, the danger of retaliatory action by Commonwealth Governments and confusion as to how the proposals can be worked in practice, he will postpone further proceedings on the Bill to restrict Commonwealth immigration, pending direct personal consultation between himself and the Commonwealth Prime Ministers mainly concerned.

The Prime Minister (Mr. Harold Macmillan): No, Sir. I do not accept the implications of the hon. Member's Question and I believe that the normal consultations which are at present being conducted with Commonwealth Governments are the most appropriate in the circumstances.

Mr. Chapman: Has not enough damage been done to the Commonwealth by this Bill already? With every reputable newspaper in the country now condemning it, has not the time for stubbornness and face-saving gone by? If, as we understand from public statements being made in the Commonwealth, approaches are being considered for consultation on the principles and content of the Bill, as well

as on its operation, will the Prime Minister say whether he will meet these requests and whether he will be willing to sit down with other Commonwealth leaders to discuss the principles and content of the Bill?

The Prime Minister: No, Sir. As I have explained, we have been in consultation and are still in consultation as regards the operation of the Bill.

Mr. Gordon Walker: Surely the Prime Minister could simply say that, if any Commonwealth Prime Minister asks for personal consultations, he will at once accede to the request?

The Prime Minister: Yes, Sir. Of course.

Oral Answers to Questions — DR. ADENAUER (MEETING)

Mr. Healey: asked the Prime Minister if he will seek an early meeting with Chancellor Adenauer to discuss the Berlin situation.

The Prime Minister: I hope that I shall be able to meet Dr. Adenauer before long, but I cannot say exactly when it will be.

Mr. Healey: In view of the disturbing reports that, at a meeting between Dr. Adenauer and President Kennedy last week, the German Chancellor agreed to negotiations on Berlin only under conditions which would make the success of negotiations impossible, can the right hon. Gentleman assure us that when he meets Dr. Adenauer—as I trust that he will—he will point out to him the great advantages to Germany, no less than to everybody else concerned, of discussing at this stage with Mr. Khrushchev the possibility of controlling arms and forces in Central Europe?

The Prime Minister: Of course, all those are wider questions. As the hon. Member perhaps knows, the Chancellor's visit to Paris has, unfortunately, had to be postponed owing to his illness. I understand that it is hoped that the visit will now take place on 9th December. On 13th December the N.A.T.O. Ministerial Council meets, when there will be opportunity for the Foreign Ministers to meet.

Mr. M. Foot: Does not the right hon. Gentleman think that a meeting with


Dr. Adenauer is especially urgent in view of the right hon. Gentleman's apparent unawareness of the reports to which my hon. Friend the Member for Nelson and Colne (Mr. S. Silverman) referred? Has not the right hon. Gentleman seen the widespread reports that President Kennedy agreed to drop any proposals about controlled armaments or disengagement under pressure from Dr. Adenauer? Is the Prime Minister telling us that he is unaware of these discussions?

The Prime Minister: Reports about private conversations between two statesmen are apt to be rather varied and sometimes rather inaccurate.

Oral Answers to Questions — PRESIDENT DE GAULLE (VISIT)

Mr. Healey: asked the Prime Minister if he will make a statement on his recent official meeting with President de Gaulle.

The Prime Minister: President and Madame de Gaulle accepted a private invitation to spend last week-end at home with my wife and myself. The President's visit was not an official one and our conversations were of an informal nature.

Mr. Healey: While the right hon. Gentleman's reply was no more surprising than it was informative, may I ask him whether it is true, as implied by his Answer earlier, that President de Gaulle has agreed that the French Foreign Secretary should attend a meeting of Western Foreign Ministers to discuss the Berlin problem in December? Can the right hon. Gentleman also say whether he raised with President de Gaulle the question of French participation in the forthcoming discussions on a nuclear test ban treaty?

The Prime Minister: As to the second part of that supplementary question, it would be a great error, having agreed not to have a communiqué, for me to make a statement now about our conversations. As for the first part, I am hopeful that there will be a meeting of the Foreign Ministers, and I understand that there will be one.

Mr. Emrys Hughes: Can the right hon. Gentleman assure us that he discussed the problem of the Common

Market with President de Gaulle and that he impressed on the President the importance of the fact that any agreement on the Common Market should be acceptable to the Commonwealth and to the British agricultural industry?

The Prime Minister: As I have said, our discussions were informal but not, of course, of an irrelevant character.

Oral Answers to Questions — COMMON MARKET NEGOTIATIONS (LORD PRIVY SEAL'S SPEECH)

Mr. H. Wilson: asked the Prime Minister what request he has received from the Canadian Government for a copy of the statement made by the Lord Privy Seal to members of the European Economic Community on the subject of Great Britain's entry into the Common Market; and what reply he has given.

The Prime Minister: I have nothing to add to what the House has been told in answer to Questions and, in particular, to the Answer given by my right hon. Friend the Lord Privy Seal yesterday.

Mr. H. Wilson: This Question was put down before yesterday's exchanges and before the House received the information which it got over the weekend. To remove all doubt, will the Prime Minister say whether it is the case that until last Thursday—this point was not dealt with by the Lord Privy Seal yesterday—the Government were still maintaining their refusal to give this document to the Canadian Government?

The Prime Minister: Yes, Sir. Until it had been agreed that it should be widely circulated, that was the position. I think that the position was made very clear by my right hon. Friend the Lord Privy Seal yesterday, and I have little to add today.

Oral Answers to Questions — COMMONWEALTH AND SOUTHERN IRISH RESIDENTS (FRANCHISE)

Mr. Ginsburg: asked the Prime Minister if he will have consultations with the political parties with a view to proposing a Speaker's Conference on the franchise rights of Commonwealth and Southern Irish people resident in this country.

The Prime Minister: No, Sir. I do not at present see a sufficient case for asking Mr. Speaker to convene a Conference on these matters.

Mr. Ginsburg: In view of the anxiety which exists, may we have an assurance that no limitation of the franchise is expected? Would the right hon. Gentleman also bear in mind that the Government will be creating two categories of citizens—a member of one of which can vote, become a Member of Parliament, perhaps even Prime Minister, but will still be liable to deportation under the new legislation?

The Prime Minister: There are two categories of residents in this country—that is quite true. A Commonwealth citizen, if resident here, is entitled to vote because he is a British subject. That comes under the British Nationality Act, 1948. But a Southern Irish citizen resident in this country is also entitled to vote, although not, of course, a British citizen. That comes under the Ireland Act, 1949, which has the effect that citizens of the Irish Republic continue to have the same rights as British subjects.

Mr. Gordon Walker: Will the right hon. Gentleman look at this again? The apparent effect of the Bill is that someone who car vote or even be elected to this House might, under the Bill, be liable to deportation. That would be a very great change in our normal procedure.

The Prime Minister: A great change, and, on the whole, undesirable.

Oral Answers to Questions — NATIONALISED INDUSTRIES

Dame Irene Ward: asked the Prime Minister whether he will enter into discussions with the Departmental Ministers and the chairmen of nationalised boards about the policy of Her Majesty's Government regarding allocation of profits made by nationalised industries, having regard to the rights of consumers, workers and capital development.

The Prime Minister: I see no necessity for any such discussions.

Dame Irene Ward: Can my right hon. Friend make a declaration now that, when there is a profit in the nationalised industries, it would be in the interests of

the community if there were some reduction in the prices of their commodities to the consumer? Would not this have a good effect not only on our export trade but on those in this country who are looking for a reduction of prices rather than ever-increasing increases?

The Prime Minister: No. Sir. It is rather like the old adage—first make your profit and then divide it up.

Dame Irene Ward: But the electricity industry has made a profit.

Hon. Members: Hear, Hear.

The Prime Minister: It has, but in the electricity industry the surplus is required, under the Act, to be paid to the Exchequer—which has had to provide the capital—to pay interest and to finance future capital development.

Dame Irene Ward: In that case, why is it going in increased wages?

The Prime Minister: I think that we should be fair to the management of the industry. [HON. MEMBERS: "Hear, hear."] Very large sums have been invested in capital by Government loans, not all out of the profits of the industry. [HON. MEMBERS: "Most of it."] A great deal from the profits, but some by Government loans, as the Act lays down. The average price of electricity to the consumer is 25 per cent. more than it was ten years ago, and in relation to the general average of retail prices that is not a large rise.

Mr. Pentland: asked the Prime Minister what recent request he has received from the respective chairmen of the nationalised industries to have consultations with Her Majesty's Government about the future working of their industries.

The Prime Minister: No such request would be necessary. Regular consultations take place in the normal course of business between the chairmen of nationalised industries and the appropriate Ministers.

Mr. Pentland: Bearing in mind the right hon. Gentleman's statement last Tuesday on the Electricity Council's wage award, will he give us a firm assurance that he will not issue a general


directive to any chairman of a nationalised industry to comply with the Government's pay pause policy when it has a wage claim under consideration?

The Prime Minister: Yes, Sir. I will willingly give that assurance, because I understand that it would be illegal for the Government to give such a directive.

Mr. Grimond: While it may or may not be illegal for the Government to do so, should not the Prime Minister be a little more specific about what he expects the nationalised industries to do? If he is not prepared to give them a general direction in the national interest, would he not say that there must be some latitude in the interpretation of the pay pause to allow at least some increase in wages, possibly within some limit, rather than trying to enforce a standstill which he admits to be unenforceable and which may do great damage to the industrial relations of the country?

The Prime Minister: No, Sir. I said last week that the Government did not regard the settlement as being consistent with the policy of the pay pause. That is a fact and I repeat it.

Mr. Nabarro: While in certain quarters it may be considered illegal for the Government to give a general direction in the instance of a specific wage claim, would not the Prime Minister agree that within the existing Statutes it must be a possibility that the appropriate Ministers can give a general direction to the heads of State boards to require that their general economic and financial policy is in consonance with that of the Government, including wage restraint?

The Prime Minister: That is another question. I was answering the supplementary question which was put to me and to which I gave an accurate reply.

Oral Answers to Questions — DISARMAMENT

Mr. P. Noel-Baker: asked the Prime Minister whether he will propose to the Prime Ministers of the other Commonwealth countries that a joint Commonwealth committee of scientists and other experts should be set up to prepare a detailed draft plan for a disarmament treaty, based on the principles

adopted by the Commonwealth Conference on 19th March, 1961.

The Prime Minister: The United States disarmament plan calls for various expert groups to be set up under the International Disarmament Organisation. I think it will be best to continue to give our support to that plan, which follows the lines of the Commonwealth Prime Ministers' statement on disarmament of March last.

Mr. Noel-Baker: Would it not help the international committee if a Commonwealth committee were set up to put forward practical detailed plans as to how the principles can be carried out?

The Prime Minister: I will, of course, consider that, but I think that as we have this plan under consideration, the best thing is to support it and get the expert groups under it.

Mr. Noel-Baker: Might I put it to the Prime Minister that it is now eight months since the Commonwealth declaration was made and that after the most assiduous questioning of him and other Ministers I cannot find out that the Government are doing anything in the way of practical preparation?

The Prime Minister: The practical and very satisfactory thing is that the United States disarmament plan follows so closely the principles of the Commonwealth statement.

Oral Answers to Questions — SUMMIT CONFERENCE

Mr. A. Henderson: asked the Prime Minister whether he will now make a statement on Her Majesty's Government's proposals for an East-West Summit Conference.

The Prime Minister: Her Majesty's Government have made no such proposal although, as the right hon. and learned Gentleman knows, we would not hesitate to do so should we consider that the situation required it.

Mr. Henderson: In view of Mr. Khrushchev's statement that he was willing to meet Western leaders in a Summit Conference, may we take it that Her Majesty's Government would be prepared to enter into such a conference


if the ground were sufficiently prepared? Are diplomatic conversations taking place with a view to preparing the ground for a Summit Conference?

The Prime Minister: No, Sir; I do not think, especially with respect to a Summit Conference, that conversations are going on with regard to the problem. As the right hon. and learned Gentleman knows, if I thought that the timing was suitable for preparations, I should be very happy to join in such a conference.

Mr. S. Silverman: Can the right hon. Gentleman confirm, or possibly deny, the reports that are circulating that, as the price for securing Dr. Adenauer's consent to negotiations about Berlin, an agreement—

Mr. Speaker: Order. The supplementary question must be out of order unless the Prime Minister is responsible for the reports.

Mr. Silverman: Mr. Speaker, my question was to be not so much about the responsibility for the reports but about what the Government's attitude would be to them.

Mr. Speaker: Perhaps the hon. Gentleman could so frame his supplementary question. So far it is out of order.

Mr. Silverman: May I put it this way, Mr. Speaker? Has the Prime Minister's attention been drawn to reports that in the conversations between President Kennedy and Dr. Adenauer, Dr. Adenauer was persuaded to agree to the negotiations about Berlin at the price of the giving up of all ideas about wider negotiations, and can the right hon. Gentleman say what the attitude of Her Majesty's Government would be to any such proposal?

The Prime Minister: No, Sir. I know nothing of these reports.

FEDERATION OF MALAYSIA

The following Question stood upon the Order Paper:

Mr. MARQUAND: To ask the Secretary of State for Commonwealth Relations whether he will make a statement about the recent discussions with the

Prime Minister of Malaya on the proposal to establish a Federation of Malaysia.

The Secretary of State for Commonwealth Relations (Mr. Duncan Sandys): With permission, I will now answer Question No. 84.
As a result of discussions last week with the Prime Minister of Malaya and other Malayan Ministers, we agreed that the creation of a Federation of Malaysia, embracing Malaya, Singapore, North Borneo, Sarawak and Brunei, was a desirable aim in the interests of the peoples concerned.
We accordingly decided to set up a Commission to ascertain the views of the inhabitants of North Borneo and Sarawak on this question, and we made arrangements to consult the Sultan of Brunei.
We also agreed that, in the event of a Federation of Malaysia being established, the existing defence agreement between Britain and Malaya should be extended to embrace all the territories concerned, subject to the proviso that Britain would have the right to continue to maintain her base at Singapore.
The base at Singapore is, of course, a British base and not a S.E.A.T.O. base; and we would, naturally, not be free to transfer control of the base to any other nation or group of nations. However, the agreement makes it clear that Britain would be permitted to make such use of the base at Singapore as she may consider necessary for the purpose of assisting in the defence of Malaysia, and for Commonwealth defence, and for the preservation of peace in South-East Asia.
A White Paper containing a joint statement by the two Governments, the terms of reference of the Commission and the text of the agreement on defence is now available in the Vote Office.

Mr. Callaghan: Is the right hon. Gentleman aware that an arrangement which makes for a close federal link between Malaya and Singapore will be very generally welcomed, and that we trust that this will be the beginning of a very happy and close relationship between the two States?
While I acknowledge that the Government have set up a Commission, will


the right hon. Gentleman take very great care to ensure that the opinion of the two Protectorates and the Sultanate is carefully taken into account? We do not want any repetition of what has happened in the case of federations elsewhere. I ask the right hon. Gentleman to be particularly careful—because there is opposition to this suggestion in some of these territories—to ensure that the proposition is properly canvassed and that there is a fair expression of opinion among those three smaller territories.
The right hon. Gentleman will know that what he has said about the defence agreement is not what the Tunku has said. What are we to understand about the position which seems to arise? Is it the case that in Malaya we cannot move British troops for a particular purpose without the consent of the Tunku, but in Singapore, according to what the right hon. Gentleman has said—because he calls it a British base—even under the new agreement we shall be free to use troops with or without the consent of the Tunku? Is not this an impossible situation?
In view of experience and the history of bases in different parts of the world over the last few years, ought not the right hon. Gentleman and the Government to acknowledge the reality of the situation, which is that we shall not be able to use Singapore fully without the consent of the people who have responsibility for government? Why not say so? If that lessens the value of Singapore, let us acknowledge that it lessens the value and let us re-examine the question of the use of the base and how worth while it is to us.
May I ask, further—[HON. MEMBERS: "Oh."]—I will conclude. I do not wish to take too long, but there is an important discrepancy between the two Governments. May I ask the right hon. Gentleman whether he would not get out of his present difficulty by acknowledging that we will not be able to use Singapore, whether it is called a British base or not, unless we have the consent of the federal authorities of Malaysia?

Mr. Sandys: I am not in any difficulty. It is all very well for the hon. Member to say that we are in contradiction. Different people sometimes say the same thing in different ways.

The problem which the hon. Member has in mind is the use of the Singapore base in support of our obligations to S.E.A.T.O. That is the crux of the matter. Let us examine it.
As I have stated, the agreement would permit us to use the Singapore base for the purpose of assisting in the defence of Malaysia and for the preservation of peace in South-East Asia. These are the precise words of the agreement which we have reached. That, obviously, does not exclude the use of the base to discharge our obligations to S.E.A.T.O., which exists for the precise purpose of preserving peace in South-East Asia. If we are to play our full part in preserving peace in South-East Asia, we must be free to use our forces in the area in whatever way we consider most effective.

Sir G. Nicholson: No doubt my right hon. Friend is aware that many of the inhabitants of North Borneo and Sarawak are extremely primitive. Will he take particular care to see that their interests and protection are not overlooked and that he not only considers the view of the rich Chinese commercial population, but also realises that a special responsibility for these primitive peoples attaches to Her Majesty's Government?

Mr. Sandys: I assure my hon. Friend that that is something which we have very much in mind. It will be the main function of the Commission to make it its business to ascertain the views of all the elements in the populations concerned.

Mr. Grimond: Is it definitely agreed that the base can be used in support of S.E.A.T.O. even in circumstances in which there is no threat to Malaysia or any other part of the Commonwealth?

Mr. Sandys: The exact words in the agreement are that the United Kingdom may
make such use of these bases and facilities as the United Kingdom may consider necessary for the purpose of assisting in the defence of Malaysia and for Commonwealth defence and for the preservation of peace in South-East Asia.

Mr. Grimond: "And"?

Mr. Sandys: "And" in each case. The right hon. Gentleman is a lawyer.


That does not mean that all these things have to be involved in all circumstances. I think that it should be borne in mind that the preservation of peace in South-East Asia is one of the essential interests of Malaya itself.

Sir D. Walker-Smith: Will my right hon. Friend say whether there are any economic implications in the proposed Federation, and, in particular, whether any changes are involved or contemplated in tariffs and Commonwealth preference?

Mr. Sandys: That will be a matter for the Federation if and when it comes into being.

Mr. G. Brown: Will the Minister help us to clear up the real meaning of what he has been saying? Is it not a fact that as regards the future use of this base, the Tunku, at any rate, understands that his local authority's prior approval will be necessary?
Is it not a fact that he has said two things in a message to Mr. Lee Kuan Yew? First, that Britain would no longer have the right to use her Singapore base as she pleased, and, secondly, that the Treaty permits the use of the base only with the agreement of the future Malaysian Government, and not as a right?
If we are not to store up a lot of trouble for ourselves in future and some problems for the Tunku and Mr. Lee Kuan Yew at present, would not it be better if the Minister said clearly in the House that what the Tunku has said out there is so?

Mr. Sandys: I think that it is much better to base ourselves on the precise words which we have worked out together and which have been signed by the Tunku and my right hon. Friend the Prime Minister, a copy of which is available in the Vote Office now. I think that I can say this with confidence. I am sure that what I have said in the House today in explanation of the position is something with which the Tunku will agree.

Sir P. Agnew: Can my right hon. Friend say which of the territories under this plan will remain under the sovereignty of Her Majesty, and who will be the Head of State of the Federation?

Mr. Sandys: The Federation has not yet been created. If the Federation is formed, it will be an extension of the existing Federation of Malaya, and, therefore, the Head of State—though this still has to be decided—will presumably be the elected King of Malaya.

Mr. G. Brown: May I put it to the Minister this way? Either the agreement provides that the base may be used by us in certain circumstances without the prior agreement of the Tunku, or it provides that in every case we have to get prior agreement. The Tunku has said that the latter is true. Will the Minister say which he understands to be true?

Mr. Sandys: The right hon. Gentleman talks about what the Tunku has said, but to my mind what the Tunku has signed in the agreement—

Mr. Brown: indicated dissent.

Mr. Sandys: It is all very well. If the right hon. Gentleman thinks that the signature is of no validity and of no importance he can shake his head, but when after three days of most careful discussion and negotiation, an agreement is reached and signed by the Prime Ministers of two countries, I think that the words contained in that agreement, which are crystal clear, should be regarded as the operative interpretation of anything which may have been agreed between the two countries.

Mr. Zilliacus: Will the right hon. Gentleman confirm that, according to his reading of it, the Treaty means that the Federation, although not a party to S.E.A.T.O., may be involved in a S.E.A.T.O. war by the unilateral action of the Government without the assent of the Federation Government. Is that the position?

Hon. Members: Answer.

Mr. G. Brown: I understand what the Minister says about the words of the agreement, but is it not of absolute importance that, if this agreement is to be worth anything at all to us in the future, the interpretation placed on it over there should not be different from the one which the Minister is trying to place on it here? Is the Minister saying that what the Tunku has said in Malaya and to Singapore is not a proper interpretation of the agreement?

Mr. Sandys: I ask the right hon. Gentleman not to try to make difficulties. I do not think that the Tunku would mind my saying that the statement made to the House has, in accordance with normal courtesy between Governments, been cleared with him. Therefore, I have every confidence that what I have said today will be agreed and is in accord with the views and understanding of the Prime Minister of Malaya.

Sir J. Barlow: Will my right hon. Friend watch particularly the interests of the primative Dyaks in Sarawak and North Borneo rather than the interests of the people who have recently gone to those countries and are trading in the larger towns and ports?

Mr. Sandys: Certainly.

Several Hon. Members: rose—

Mr. Speaker: Order.

Mr. Callaghan: Is not the truth, Mr. Speaker—

Mr. Speaker: Order. I thought that the hon. Member was addressing me. That is why I sat down. I appreciate the difficulty, but there is no Question before the House. We ought to try to find a different occasion to debate this matter, because this is not the moment to debate it.

Mr. Callaghan: On a point of order. Mr. Speaker, Must not I address you in any case? That is what I was doing.

Mr. Speaker: I thought that the hon. Member was rising to address me about some other matter, about permitting a further question, or the like. I do not wish to adopt any sharp practice about this, but I hold the view that we ought to pass on to other business.

BALLOT FOR NOTICES OF MOTIONS

Rural Transport

Mr. Hayman: I beg to give notice that on Monday, 11th December, I shall call attention to the problems of rural transport, and move a Resolution.

Hospital Service (Human Aspects)

Mr. Graham Page: I beg to give notice that on Monday, 11th December, I shall call attention to the human aspects of the Hospital Service, and move a Resolution.

State of the Scottish Economy

Mr. Willis: I beg to give notice that on Monday, 11th December, I shall call attention to the state of the Scottish economy, and move a Resolution.

PUBLIC INVESTMENT

3.47 p.m.

The Chief Secretary to the Treasury and Paymaster-General (Mr. Henry Brooke): I beg to move,
That this House takes note of the White Paper on Public Investment in Great Britain (Command Paper No. 1522).
This White Paper shows how available resources can best be laid out in public development over the next sixteen months or so to achieve the maximum of economic growth. Growth must be our aim; growth at the right pace so that we do not trip up by trying to cover too much ground too quickly; and properly shared growth so that we do not allow deficiencies to go unremedied.
The sums of money involved here are vast—£1,640 million last year, £1,755 million this year and £1,840 million next year; and it will be nearer £1,850 million, for reasons that I shall explain later. We are spending something like one-thirteenth of the gross national product on public investment alone. We are aiming to spend 12 per cent, more on this next year than we did last year.
Public expenditure on this scale exercises a permeating influence upon the whole of our economy, and it is basic to the task of getting our public expenditure right to make sure, first and foremost, that we get our public investment policy right. What do I mean by getting public expenditure right? I mean seeing that we spend enough on the necessary things—and that is most essential—while guarding against public expenditure taking an ever-increasing share of all our national resources. Unless we guard against that danger there will not be enough of our resources left available for all the rest—for manufacturing investment in the private sector, for trade and commerce and for exports. Then we shall not earn enough foreign exchange to pay our way.
I know that all that would be altered if, by some Russian form of State control, we screwed down everybody's day-to-day consumption and put into reverse the rise in the standard of living that we have experienced over the last ten or fifteen years. But I doubt whether anybody wishes State control like that here. In Britain, in these days, the whole time

we must always frame our economic policies to earn a surplus in foreign exchange—a surplus sufficient to get our balance of payments right and keep it right. Most of our economic troubles will dwindle and vanish when we have done that—and we could do it; we could shake ourselves free of this drag if the whole nation wished it.
There is no reason why the share of British exports in world trade should not stop falling and start to rise, if we are all determined to make it do so. In the field of public expenditure what we need to do is to see that we get value for money, to make sure that we get our priorities right, to give special priority to the kinds of expenditure which help economic growth and make us more competitive and more efficient and, most important of all, to take into account public expenditure as a whole, not just this year and next year but for many years ahead, and so to control it that it does not get out of step with our prospective resources.
Those are the four principles. It is easy and tempting to ignore all this and take the brakes off, as the Opposition Amendment invites us to do. It is tempting and easy—but it would be disastrous, because very quickly home demand would get out of hand, our resources would become overloaded, our balance of payments would go wrong, and sterling would be in danger.

Mr. W. A. Wilkins: The Government told us that ten years ago.

Mr. Brooke: That must not happen, and that is why the Government will resist the Amendment. They do not intend to see the Chancellor's measures of July undone. The White Paper points out clearly, in paragraph 17, that the reason why capital investment next year, as compared with this, is not to be greater still is to increase the long-term strength of the economy. That will be of far more long-lasting benefit to everybody than the sort of quick indulgence which the Amendment recommends.
It might be argued that the 1962–63 figures in the White Paper are not too small—as the Opposition seem to think—but too big. I do not believe that that is so. We could not hold our own in the


world if we were content to become static. The gross national product in recent years has been increasing by just under 3 per cent, per annum. [HON. MEMBERS: "Too small."] Too small, I agree. To lay a basis for long-term prosperity and to stimulate economic growth we ought to be saving and investing at a rate greater than the growth of our economy. That is what we are planning for. In the White Paper we propose an increase of 5 per cent. in public investment next year. That will be an increase in expenditure of no less than £200 million in two years. We can manage that, but I do not think that we can manage more without getting into difficulty.
After all, investment expenditure is doubly important in relation to public expenditure as a whole. Investment expenditure does not represent simply the immediate demand on the resources at the moment; in many cases it also creates a need for continuing current expenditure in the future. Of course, if the investment expenditure is pure replacement of an old asset that may not happen; but a large part of all the capital expenditure set out in the White Paper is intended to add to the total stock of assets, and that is bound to add also to future maintenance costs.
That brings me back to the supreme importance of looking far ahead and counting total costs and not just immediate cost. It is the total cost of all public expenditure, present and future, that we have to prevent from outrunning the rate of growth of the gross national product. These principles are fairly obvious. However, they may not be commonly realised. The searching difficulty is to put them into effect, and one powerful reason is the immense variety within the whole public investment programme.
That variety is apparent as one turns over the pages of the White Paper. How does one get into perspective such things as nuclear power stations and public houses in Carlisle, or new schools, new post offices and new sewerage works? How does one do all that and get the balance right when a little more expenditure in one direction may mean a little less expenditure in another?
There is another complication besides that. The chain of responsibility for

financing and carrying out the actual investment projects varies widely from one field to another, as the White Paper points out. Motorways, flyovers and new Government buildings, for example, are financed wholly out of Votes, and the work is carried out for the Government Department concerned. Hospitals are financed out of the Votes, but the work is done by and for the hospital boards. University building, again, is in a category of its own. It might be argued that it should belong to the private sector, but about 95 per cent. of it is financed through the University Grants Committee, and in the White Paper this is treated as public investment.
Then there is the very big block of local authority investment, which is largely financed by borrowing. There are not only the big programmes like education and housing,—which is the biggest of all; there are those for water and sewerage, the figures for which increase every year, as well as those for small items such as new office buildings for local authorities, street lighting, unclassified roads, public lavatories—without turnstiles from now on—and a great many other things in the miscellaneous field.
Finally, we come to the nationalised industries and the public corporations. They are fairly homogeneous group, in that they mostly meet their capital requirements either from their internal resources or by borrowing from the Exchequer. But they are not quite a homogeneous group, because the Atomic Energy Authority, which is included among them, in financed directly by Vote.
In last year's White Paper we treated the whole of this huge mixed bag of public expenditure as one group. This year we have made what I hope will be agreed is an improvement in the presentation. In the White Paper we distinguish between the investment of the nationalised industries and the public corporations, on the one hand, and, on the other, what we call public service capital expenditure; that is to say, the investment expenditure of the central Government and of the local authorities. This distinction really springs from the redefinition of Government policy towards the nationalised industries contained in the White Paper, Cmnd. 1337, Financial and Economic Obligations of the Nationalised Industries, published last April.
Emphasis is laid now on the financial performance of each of the boards and in discussion with boards we are now engaged in setting financial targets for each of them. We aim to improve the standing and improve the management of each of these industries and to keep down their demands on the Exchequer. Their investment should not be controlled in such a way as to jeopardise their ability to reach their financial targets. It is by this standard, as well as by the need to provide essential supplies and services, that we propose from now on to judge the investment proposals by the nationalised industries.
Perhaps I ought to tell the House of a relatively small change in the figures for the nationalised industries in the table on page 6 of the White Paper. The authorisation to the Gas Council to import liquified gas from North Africa will involve some additional capital investment in 1962–63. That will put up the rounded total in the lower left-hand corner of both tables on pages 6 and 7 from £1,840 million to £1,850 million.
That extra expenditure is, of course, fully justified by the financial test, but the decision was too late for inclusion in the White Paper. Even with it, the absolute increase and the relative increase in nationalised industries investment for 1962–63 will be not so great as the increase in public service capital expenditure. There is no doubt, of course, that the latter, the public service capital expenditure, often contributes to economic growth and efficiency no less than the former.
One need only take an example like schools and universities and roads. If we want growth and efficiency and competitive power, then, to hold our own in the modern world, we must have more of all of them, just as we must have more electricity. In all these we try to get the best value for money right across the board, by working out sensible long-term plans. We do it for electricity. It is necessary to do so when planning new power stations. We have been working on a five-year plan for school building and technical education and the universities. We are now encouraging hospital authorities to look further ahead still. My right hon. Friend the Minister of Health has asked hospital

authorities to draw up plans over ten years.
The latest long-term programme is for roads. The figures on page 6 of the White Paper show how swiftly road expenditure has gone ahead in the last few years. My right hon. Friends the Minister of Transport and the Secretary of State for Scotland can now plan on the basis of further large increases in the next five years, as was shown by the announcement to the House on 2nd August. In every field we are more likely to avoid waste and get the best value for money if we plan ahead with a clear idea of what we want to achieve and what is a realistic rate of implementing the plans to achieve it.
In the examples which I have quoted it is the central Government who play a leading part, or, at any rate, exercise a decisive influence on the agencies which do the work. But long-term planning ought to be the normal thing in all public capital expenditure. We do not want to see it confined to those spheres where there is a high degree of central control or central influence. I would recommend to local authorities—to whose help I owed so much during the last five years when in another office—to think more and more in terms of long-term planning.
I am sure that my right hon. Friend the Minister of Housing and Local Government would back me in saying that every finance committee ought to ask its treasurer or finance officer to prepare schedules of all the projects of a capital nature which are liable to come along in the next four or five years, showing what they will cost each year in loan charges and in running expenditure. Then, with those figures before them, the committee, just like the central Government nowadays, can take a long view. In this way they will find it easier to see the whole picture in perspective and get the priorities right.
I am speaking now of local priorities which, generally, can best be decided by the local authority itself. It may be a question whether a new town hall should await the rebuilding of the central library, or whether, perhaps, a new headquarters for the fire brigade should have priority over both the other projects. Those are matters for each local authority to consider and the reason I stress the importance of this "planning down the line"


is because so small a percentage of public investment is actually carried out by the central Government.
In what the White Paper defines as the public service capital expenditure, no less than four-fifths of the work is carried out by the local authorities and not by the central Government. Long-term plans are valuable, but they must not produce excessive rigidity. Modifications are bound to be needed as circumstances change and five-year programmes, which are a good thing in themselves, ought to be given an up-to-date review each year; and then the programme can, so to speak, be unrolled for a further year ahead at the end.

Mr. A. Woodburn: What the right hon. Gentleman has said so far has been very interesting, but this point occurs to me. A local authority's plan may be seriously upset if, for example, a big oil company decides to build superfluous garages and petrol stations. Would the Minister suggest that local authorities should use their planning powers to regulate building in that direction as well?

Mr. Brooke: I think it desirable that all the way through we should plan for economic growth. In my experience, a local authority is generally pleased rather than otherwise if a big, new industrial or commercial installation is planned for its area. But I accept at once from the right hon. Gentleman that these five-year plans must be reviewed from year to year and there may be other developments not under the control of the local authority which may lead it to alter its priorities as time goes on. That applies to changes in local circumstances, but I would add that flexibility in the long-term plan is important for another reason, which is a national reason. National economic circumstances may change as well as local wants and needs.
For many years, up to quite recently, it was almost universally held that deliberate variations in the level of public investment could play a major part in keeping the whole economy on an even keel and maintaining a high level of employment. Hon. Members will find that idea prominent if they care to look, in the White Paper on Employment Policy which the Coalition Government published in 1944 and which I well

remember Mr. Ernest Bevin presenting to the House.
We now believe that, in the conditions of today, the scope for short-term variations of this kind is comparatively limited. I think that that is partly due to the vast extension nowadays of the public sector and partly due to the length of the chain of command, so to speak, in many fields of public investment. It is also due in part to the very high percentage rate of employment at which we now run the country, tolerating much narrower variations in it.
Perhaps the most important reason of all for this new view is the shorter and shallower post-war cycle of economic fluctuation. These views, which I have outlined, were expressed in the 1960 White Paper on Public Investment. Since then, they have been endorsed by the Plowden Committee on the Control of Public Expenditure, in its very helpful Report which was published in July.
But just because the value of short-term adjustments is probably smaller than we assumed in days gone by, it would be quite wrong to neglect their usefulness completely. We have devised a system for the review of public investment plans which enables upward or downward variations of this kind to be met without upsetting long-term plans and also—this is extremely important—without wasteful interference with work in progress. I have no belief in that sort of so-called economy. Last-moment slashing nearly always loses more than it gains.
We now provide for a sensible kind of flexibility by agreeing with Government Departments and other executive authorities, such as I have mentioned, that they shall work to two figures—a higher figure and a lower figure. They may make plans up to the higher figure, but until a certain date they will not actually enter into commitments beyond the lower figure. Had everything gone favourably in 1961 we should have authorised them—and we would have liked to authorise them—to go ahead and spend up to the higher limit next year. As it was, my right hon. Friend the Chancellor had to call for restraint, and, in consequence, next year's expenditure is being kept to the lower figure. Those are the figures which appear in the White Paper.
By this process we have not interfered with orderly programming. We have not disrupted work in progress. The House will note in the big table on page 10 of the White Paper that expenditure on almost every item right down the page in the public service group will be higher this year and next year than it was last year.
The exception is housing, and for that I take personal responsibility in this debate because the decisions recorded here were made while I was the responsible Minister. The average time taken to build a council house has lengthened materially this year, simply and solely because of the overload on the building industry in 1961. There was, therefore, nothing to be gained by enlarging the programme. The right course was to try to get unfinished houses completed so that people could live in them. The most recent figure of council houses under construction in England and Wales is 127,000. In addition, there are 43,000 council houses in tenders approved, but not yet started. That makes 170,000 altogether.
This figure, 170,000, is equivalent to about twenty months' completion, and it would do no good to anybody at all to encourage local authorities to put more and more houses into contract if it simply meant that fewer houses were finished and were ready to be lived in.

Mr. Douglas Jay: Since the overload on the building industry was largely caused by things other than housing, would it not have been more sensible to limit office building than to cut house building?

Mr. Brooke: No doubt that is one of the matters which will be discussed in the debate. I know the right hon. Gentleman's desire to return to building control, but our experience of building controls was that they were not helpful to the economy. If the right hon. Gentleman has other methods of doing this, other than central building controls, no doubt he will have an opportunity of developing them later in the debate.

Mr. Jay: The Minister told us that he is in favour of building controls for housing. I am asking why he advocates them there, but nowhere else.

Mr. Brooke: The whole of this field is concerned with expenditure which is more or less under the Government's control. That is what we are discussing today. We are debating how, in the public field, public expenditure should be allocated, and that is what I have been describing in the case of housing.

Mr. R. J. Mellish: Do I understand the Minister to say that 170,000 houses is as far as he can go under public control and that it is impossible to increase that figure?

Mr. Brooke: I do not see that anybody gains by increasing the number of houses under construction when the complaint from local authorities throughout the country is that their building sites are undermanned owing to the overload on the industry. The essential thing is to get these houses finished, and that is what the Government's policy is designed to secure.

Mr. G. R. Mitchison: I will try to make a third attempt to make this clear. Might it not be better, in those circumstances, to build fewer offices and more houses?

Mr. A. P. Costain: Is it not a fact that only 2·5 per cent. of the building effort is at present on building offices and that 35 per cent. is on ordinary maintenance? Is it not possible that it is maintenance which has contributed more to the situation than office building?

Mr. Brooke: It is true that our office building is a comparatively small amount of the whole. It is also true that the measures which the Chancellor took by raising the Bank Rate and by the credit squeeze will undoubtedly have an effect on all kinds of building. I am describing what the Government have in mind for council housing, and I am explaining the very material and commonsense reasons why we are not putting into the White Paper higher figures for housing next year, although we are putting in higher figures for everything else.

Mr. H. Rhodes: How can the Government plan this side of the economy without including the private sector? We all know that the building industry is overloaded. Why rely on the Chancellor to apply a mone-


tary brake from his side and not plan the private sector, as he has clearly shown that he intends to plan the public sector?

Mr. Brooke: We are dealing in this debate with that sector of the whole economy which is more or less under Government control, in that public money is being spent here. Over the whole of the rest of the field it is private money which is being spent. Unless the hon. Member is urging a complete system of control of all capital expenditure of all kinds, there must be this distinction between the public and the private sectors. The hon. Member may differ from me, but hon. Members on this side of the House are quite clear in their minds that we shall not get sound economic growth by reverting to a system of the State control of building and of all other forms of capital investment.

Mr. Mellish: The right hon. Gentleman was Minister of Housing and is, therefore, an expert in this matter. I take it for granted that he would be the first to agree with me that there is an urgent need today for more houses. Both he and I want more houses to be provided. I therefore ask him this simple question. How does he see this being achieved in the coming year, or does he say in effect, "There is nothing I can do. One hundred and seventy thousand houses is the most we can ever have"?

Mr. Brooke: At the very beginning of my speech I said that we were setting out in the White Paper the capital investment programme for the next sixteen months. Just before I was interrupted I pointed out that there were already under construction council houses equivalent to twenty months completions. I am sure that it is a reasonable point to make that this is not the moment to encourage local authorities to start more and more council houses, but rather that one should concentrate the available labour on getting those which are already started finished as quickly as possible.

Mr. Mellish: What about the future?

Mr. Brooke: I understand that the hon. and learned Member for Kettering (Mr. Mitchison) is to move the Amendment. In this matter we continue another field the friendly antagonisms we

have experienced elsewhere. If he intends to allege that housing, health, education and other social purposes are being starved, as the Amendment appears to suggest, I draw his attention to the fact that in the White Paper the Government are planning for public service capital expenditure to be 20 per cent. higher next year than it is this year.
Incidentally, the hon. and learned Gentleman will see that capital investment on hospital and health and welfare services will be up not by 20 per cent., but by 50 per cent. Possibly "health" got into the Amendment by mistake. It hardly sounds like starvation, anyway.
The truth, of course, is that public investment as a whole has been going ahead fast and seems likely to continue to go ahead fast. It is going ahead much faster than the gross national product. To achieve the right level of public investment, neither too much nor too little, is crucial to our future strength, prosperity and competitiveness. The Government's whole approach to public investment will accord with the four principles I laid down at the beginning. These principles are the key to the proper control and Use of public money.

Mrs. Barbara Castle: Will the right hon. Gentleman tell the House what proportion of the total investment in this country is public investment?

Mr. Brooke: I think that it is about 40 per cent., but my hon. Friend the Financial Secretary, who will wind up the debate, will give the hon. Lady as accurate a figure as possible.

Mrs. Castle: I should like to know the answer now, so that I can use it in the debate.

Mr. Brooke: I was about to say that when the Labour Government fell in 1951 they were conducting a public investment programme much less extensive than this and they could not manage that and save the reserves from running out. The present Government are carrying through a programme 100 per cent. larger than that in money terms and 40 per cent. larger in real terms, and they are doing it successfully. It seems a queer moment for those who were much less successful to have the audacity to criticise them.

4.24 p.m.

Mr. G. R. Mitchison: I beg to move, at the end of the Question, to add:
but regrets that the proposed scale of public investment is inadequate both for housing, health, education and other social purposes and for the achievement of the necessary economic expansion of Great Britain".
Apparently it is tempting, easy and disastrous to attempt to criticise the Government upon the grounds that they have not provided in the past and are not providing now for the necessary economic expansion of Great Britain. I shall begin with that. The right hon. Gentleman will not misunderstand me if I tell him that I read in the newspapers recently that he described himself to a Tory audience as an "abominable no-man". The White Paper may be the right hon. Gentleman's cup of tea and no doubt he has been put up to make it sound a little more exciting, but I cannot say that I find it anything but a very dismal document indeed.
I find it so for this reason. The purposes at the beginning of it, namely, the intention to control public investment—I would rather see the ordering of public investment than the control of it—are of a completely negative character. Even the 1960 version talked about public investment being designed to meet
The basic economic and social ends
which
are fundamental to the achievement of an expanding economy and a rising standard of living.
I find nothing to quarrel with in that, nor does the right hon. Gentleman. I should like to add "to the achievement of social security and social justice", words of which we have heard remarkably little either in the White Paper or today from the right hon. Gentleman.
All we are told in the White Paper is that the only effective purpose, as I read it—the other sub-paragraphs in paragraph 8 are about other matters—is
to keep aggregate long-term public investment within the limits set by prospective economic resources and other claims upon them.
In plain English, it means not to invest more than we can afford. This is a very negative statement indeed. I think that we might go a little further and consider what public investment is intended for.

This is what I propose to do in the course of criticising the White Paper.
We have to look at the record. The Government have a terrible record in the matter of the economic growth of which the right hon. Gentleman spoke. We know it well by now. He did not think fit to mention today that economic growth under Labour Government was far better than it has been in recent years under the Tories. Taking the annual rate of growth in the real domestic product, as it is called—that is to say, eliminating any factor of prices—we find that it is 2½ per cent. in this country, whereas in other comparable countries—other industrial countries, to use the common phrase for the purpose—it is invariably higher, for instance, 4 per cent. in France and 7½ per cent. in Germany.
It is exactly the same with investment. The proportion in this country, whether we are dealing with fixed capital formation or capital formation generally, is the lowest among the industrial countries. If that is the record, it requires a very complacent Minister to say that all is perfectly well and all we need to do is not to spend too much without regard to what it ought to be spent on and for what purposes.
There is another background item which we are bound to consider. We are now pledged, along with the other O.E.C.D. countries, to a collective growth in real gross national product—just what I have been talking about—of 50 per cent. in ten years. It is true that we may or may not be able to play our full part in that. I do not know whether it is the Government's case that we are now in such difficulties and have now done so badly that we cannot be expected to attain a figure of 4¼ per cent. or 4½ per cent, per annum when, in the past, we have attained only 2½ per cent.
It is, after all, a somewhat damning criticism of the Government's record if they have to say now that there are other industrial countries in the world, but we are the poor men of Europe and we can take part in a collective effort but the only result of it will be that we will grow slower than the others and the gap that already exists in our disfavour will be enlarged.
If that is the position, and if we are expecting to increase our national product by a matter of 4½ per cent. or 4¼ per cent. every year, and if we are to play our part, let alone if we are to catch up with these other countries, then I would certainly expect much larger increases in public investment and, for that matter, in investment generally than we find indicated in the White Paper. What they are here is something like 3 per cent. or 4 per cent., something quite inadequate, in my view, to support what is a definite committal to the other O.E.C.D. countries and a definite committal to the people of this country. After all, if we are to have the constant, sluggish economy that we have had under Tory Governments, it is quite impossible to foresee any substantial increase in the standard of living and in the advantages which we all want to see accruing.
It is really a terrible state of affairs when all that the Government can say in a matter like London's housing, as the right hon. Gentleman has been saying just now, is that, "We just cannot manage it." This is not a question of how many houses are under construction, or anything of that sort. Surely if anyone looks at the office building going on in London now and then looks at the position of London housing lists, or if anyone listened to the very eloquent and sincere speech of my hon. Friend the Member for Bermondsey (Mr. Mellish) the other day about London housing, he must feel that no Government could possibly accept that sort of reason for not restoring the rate of council house building to something like what it was before the Tory Government got messing with it.
The Government have succeeded in reducing council housing in this country year by year and what is happening now is that if there is a shortage of building labour, some of it is going in building offices to an excessive scale and some of it is going in building houses for those who can afford to buy them. It is monstrous, if we are considering social justice at all, that this should be defended on financial grounds.
I prefer the French method for this sort of thing. They do not have any controls. They do it by agreement and they produce a plan. These are the open-

ing words of it, and I commend them to the right hon. Gentleman. They have a measure of panache in which he is occasionally a trifle lacking.
Within the last ten years national production per worker has increased by about 4½ per cent. per year on the average."—
that is the figure that I have just mentioned—
By this effort towards greater productivity France has placed herself in the ranks of the leading nations of Western Europe very near to Germany and Italy and far ahead of the United States and Great Britain.
Marking another stage in the upward trend, the fourth plan, even more than its predecessors,"—
this is the panache part—
emerges on a future whose main features are the fierceness of competition in the scientific and technical fields, the sweeping character of the innovations, and the swiftness of change, as much as the confronting of ideologies in a world where distances tend to diminish.
There is a great deal of sound sense and hard thinking in these somewhat eloquent words. I do not say that the plan will necessarily be up to the prologue, but I would far away begin in that spirit than in the spirit of the damp squib which the right hon. Gentleman chose to adopt today. In the modern world, having this record behind us, having this commitment to our partner nations in Europe to consider, and having regard to the general position in the country, particularly in regard to the social services, to say that any other course than that suggested by this damp Government is tempting, easy and disastrous is just talking sheer nonsense—nonsense not merely as an ideological proposition, but nonsense as the facts have shown it to be. This has worked in France; that has not worked. It is about time that we began to think again over some of these things.
I shall not attempt to go through the White Paper in any detail. I want to call attention to one thing and here I shall offer very tentatively some figures which I hope the Financial Secretary will correct when he speaks later in the evening. I have been looking at the table at the end of Appendix I of the White Paper and at the cost of the public services indicated elsewhere, and, taking the year 1959–60, and looking, also, at Table 51 in the Blue Book on National Income and Expenditure, I make it that, quite roughly, the investment in the


country totals about £4,000 million, of which rather less than £750 million is at present attributable to public services.
I do not include the nationalised industries for that purpose. I find it very difficult to get the figures exactly right. There are all sorts of minor complications, but, roughly speaking, I think that that is true. If that or anything like it is true, I say without hesitation that in a modern world and having regard to the conditions of this country today that is too small a proportion of the total investment and it ought to be increased. To increase it is neither tempting, easy nor disastrous, but it is necessary as a piece of social justice and it has to be done.
I go on from that to mention little more than one or two of the nationalised industries. I shall not say much about them partly because almost all of them get some individual discussion in the course of our proceedings—coal, I understand, will be discussed tomorrow, and it would be premature to talk about it today; gas, we have had a minor correction about gas which we all value, and electricity is perhaps the most outstanding example of an expanding and successful nationalised industry. We notice that the Airways Corporations' expenditure has been nearly halved this year, but there may be, and I believe that there are, some special reasons for that.
I turn from that to the British Transport Commission. One of the columns there is left empty and only a total appears at the end. The reason is that the whole question of investment is under consideration at the moment—I understand that Dr. Beeching will have some views on the matter—and, therefore, nothing much more can be said. I notice, however, that the provisional figure inserted appears to represent a very large reduction. We are here not talking, in spite of what the right hon. Gentleman said, about expenditure; we are talking about a capital programme today, and I find it a little puzzling. They might have left it out altogether—but in it went, and I do not quite understand what it represents, or how it has happened.
As I say, the Transport Commission is under review, but of one or two special cases I want to mention the first is the

docks. The figure for the docks represents a considerable decrease between 1960 and 1961, from £8 million to £5 million, and an increase, though a small increase, in the following year. What are the reasons for that? Docks may not sound important, but I believe that they are profoundly important, especially if we are to go into any Common Market arrangements, or are even thinking about it. I am sure that the insufficiency of dock facilities is on a par with the possible insufficiency of shipbuilding facilities, and I should like to know why a reduction is being made now.
I turn from docks to omnibuses. I know that I am taking rather small items, but I want to ask about them. There was a small decrease in investment in provincial and Scottish omnibuses between 1960 and 1961, and then, again, a small increase in the following year. If there is, in fact, to be a closing down of a large number of branch lines, is this the moment to reduce the Government's interest in the omnibus services? Surely, what we should expect at the moment is, at any rate, the possibility indicated somewhere of larger expenditure in that direction.
I pass from that—again, very shortly, because what I want to say is mostly directed to the social services—to the much-contested and troubled matter of roads. If there is to be any closing of railways, it seems to me that some of our outlying roads—I might, for instance, mention those in the Scottish Highlands—ought to be the subject of additional expenditure. Otherwise, people and their necessary supplies will just not be able to get about at all.
I must mention one small matter in connection with the Post Office. Post Office expenditure for 1961–62 is shown as £96 million. On the 21st of this month, the Postmaster-General, when asked, as far as I can see, exactly the same question, produced a figure of £119 million. Which is right? Or are they both right; if so, how—and why?
I turn from that to the social services, and I begin with what really falls within that very general field—the universities. We are told how they are financed, and when we look at the end of paragraph 74 we read:
…the intention is to authorise the starting of new building work to the value of £25 million in each of 1962 and 1963—


Those are increases, and they say so. The paragraph goes on:
…and for the calendar years 1964 and 1965 the University Grants Committee have been authorised to invite the universities to make building plans on a basis of starts of £13 million in each year. The rates at which these plans can be carried out must depend on the general state of the national economy and on factors such as building costs.
My first comment is that that is linked with the proposition that we shall reach a university population of 170,000 or thereabouts in the early 1970s.
…should it be so decided…"—[OFFICIAL REPORT, 25th January, 1961; Vol. 633, c. 31–32.]
Are we really to be content with figures of that order? The proportion of our people who go to universities is smaller than it is in the U.S.S.R. and, of course, much smaller than it is in the United States of America, where I know the status of the university may be distinguished—but there it is.
Perhaps I may return for one moment to the French. A great deal of the work done in universities consists of research, and the French, when putting forward their plan, say this:
"Scientific and Technical Research.
Expenditure by public research bodies will be doubled, the accent being placed on research in agronomy and medicine, biology, oceanography and space problems.
All these subjects may, of course, differ from one country to another. If, however, we are really aiming at proper centres, and proper development for research, and if we are aiming at the size of university population that would seem appropriate for the country, these provisions in the White Paper, qualified as they are by these considerations of economy year by year, are quite insufficient—or appear to be.
I should like to know what the Government's views are on this matter, and I should also like to know what the universities' views are. Are they satisfied with what is given to them from the University Grants Committee? I ask, because this seems to be a very good illustration of the tempting, easy and disastrous courses into which the Government are being induced by an excess of economy, or of apparent economy. By pruning here and pruning there, what they are really doing is to deprive us of research that we

require, deprive us of the fruits of scientific advance, and deprive a great many people of the university education by which they would undoubtedly benefit if there were room for them. That is not a good thing to do.
I turn from the universities to education generally. Of course the figures show an increase—but did anyone expect anything else? I understand that by 1965 there will be very nearly 200,000 more primary scholars than there were last year. These are figures of population; of people growing up, and so on. We all know that there was a mistake about this originally, but we must face the facts as they are. Here is a service which, on that count alone, is bound to grow, and grow very sharply.
I believe that all hon. Members recognise that what is badly needed are more teachers and more schools. In connection with the investment we are now considering, the practical points are not only the schools but the teacher-training colleges. Paragraph 79 of this White Paper says that the teacher training colleges' capacity will be increased to allow an additional admission of 12,000 by September, 1962, and then, at some future date work is to start—in the middle 1960s, we are told—for another 12,000.
Is that anything like sufficient to cope with the requirements? I venture on these things with some diffidence, but I rely on the right hon. Gentleman the Minister of Education. I think that he said that 80,000 new teachers were required to cope only with the reduction of over-size classes, yet here is Government investment in our teacher-training colleges to provide only 24,000 more. No doubt it is tempting, easy and disastrous to provide sufficient teachers for the children, but the more general view is that it is a necessary thing; and the right hon. Gentleman himself agreed that one had to have priorities, and that necessary things were one of the first priorities, if not, as I see it, the quite overriding one.
I almost hesitate to quote the figures for over-size classes, because they are such a terrible indictment of a Government which have been telling us that they have been spending more and more money on good and necessary things for some time past. What is the position of


the over-size classes? I understand that nearly a quarter of the junior pupils and no less than two-thirds of the senior ones art in classes of over 30. I do not know how many hon. Gentlemen opposite were taught in classes containing over 30 pupils. I was not. It is a shame that such a thing should go on.
More than that, it is a social shame. It is something that comes down on the children and the parents as well as on the future of the country. It makes the work of teachers exceptionally difficult—I should have thought impossible—and how the Government, with such figures before them, can say, "This is an adequate investment programme," I do not see. How they can consider that they are making sufficient investment in this field is beyond me, especially considering the number of teachers required to deal with this problem of over-size classes.
I urge hon. Members to consider the present building programme and to look at paragraph 77 of the White Paper. By just reading it, and no further, the paragraph seems to condemn itself. It states:
…the five-year programme will complete the elimination of all-age schools,"—
I should hope so—
and over three-quarters of the building needed for this is included in the work proposed for the three years ending 1962–63. It will also permit"—
and I invite the attention of the House to the following words—
a start to be made in modernising or replacing old schools. About half of our children are attending schools built before the 1914–18 war, many of which provide conditions well below modern standards.
And despite all this the Government say, "This is lovely. It is wonderful. This is all we can afford. We must be careful not to spend more than we can afford." But do the Government realise that if they are too careful in this sort of matter the country will slip into the kind of decline about which Sir Geoffrey Crowther talked the other day?
But that is by no means the end of the story, for I urge hon. Members to consider what has been going on. Some of this school work consists of what is called "minor works" and I understand that there has recently appeared something called "mini-minor works" which, I understand, are on a smaller scale—but I admit that I am not well enough up on these educational niceties.
Not a lot is stated on this subject, but if one looks carefully at what is actually being done—in paragraph 81 of the White Paper—one sees that while only two figures are mentioned there is actually a reduction of over one-third in the programme for the current year. That is done by what the Government call "phasing". This is a curious form of Government activity and enables them not to "cut" the programme—for that would not sound at all nice, especially where children are concerned—but to "phase it" and take a great deal longer over the work and, at the same time, get the same result as cutting it. As I say, that term sounds better. Surely the Government must be ashamed of themselves if they do not "come clean" and say what they are doing.
I must refer to the Albemarle Report. The Government undertook to find £3 million for work recommended by the Albemarle Committee in connection with the Youth Service. That work, we read happily in paragraph 80 of the White Paper, will be started in the two-year period 1960–62. There has been no indecent haste about that. But what about the £4 million which the Government, succumbing to these easy temptations, promised in paragraph 9 of Circular 11/60? There was an additional £4 million promised there.
Has that gone down the drain or have the Government forgotten all about it? I am, of course, talking about the youth of the country and this is not a matter which anyone can seriously regard as not being very necessary. After all, the Government made a promise knowing the facts. If they are going to go back on their word it would be better for them to come out into the open and say so.
I turn from education to health, for the hospital programme has been described by the Minister of Health in very characteristic language. The right hon. Gentleman said that it was
the key to the whole"—
National Health Service—
in that the development and integration of the whole crystallises round the development of the hospital service."—[OFFICIAL REPORT, 8th February, 1961; Vol. 634, c. 427.]
One knows what the right hon. Gentleman meant; that it is important. Obviously, it is; and both parties


promised further hospital expenditure in their election addresses. Everyone knows that the waiting lists for hospitals are too long and that a great deal obviously requires to be done.
We now know how much the Government are to spend on this over the next ten years, because the Prime Minister has said that £500 million was to be spent over the next five years on the hospital service. He said that at Brighton to the Tory Conference and the Minister of Health—who is, in some ways, a little more sober-sided—has accepted it since. It is not just a case of the sort of musical bank money that sometimes turns up at party conferences.
But if one looks at what is going on now, one discovers that the figures are a good deal lower. It is all very well the Government saying that they are going to do a much smaller job now and increase it in the years to come. But look at the Government's record of having crises. They happen every two or three years. They always take the same form and are always dealt with in the same sort of way. They also always produce the same disastrous results to some of the public services.
Hospitals are not things to be played with. If the Government start off with the kind of figure that is indicated, intending to spend £500 million in the course of the next ten years, it would be better for them to face up to all that remains to be done and to begin doing it now instead of keeping a lot of people waiting outside who should be in hospital.
I make this point in criticism both of the Government and Report under consideration, for when one considers the hospital service expenditure it is surely relevant to take into account the proportion of the national product being spent on the National Health Service as a whole. Doing that, one finds that since 1950–51 the gross proportion has remained nearly the same. What has fallen quite sharply is the cost to the Exchequer because, of course, the tendency under Tory Governments has been to put more of the cost of the Service on to the patients and the Exchequer has, accordingly, had to carry less.
When we consider the national investment in the hospital service and remem-

bers the Minister of Health's justification for what he did earlier in the year in connection with health service charges, and the like, we are bound to tell the Government that they are being mean about this. They are being mean at the expense of the wrong people; and when I say that these matters should be solved I am not suggesting anything easy or disastrous. I am merely recommending that the resources of the country should be used for some obvious purposes of social justice.
I do not intend to say much about housing, for my hon. Friend the Member for Fulham (Mr. M. Stewart) is more competent that I am to say what requires to be said, if he catches your eye later in the debate, Mr. Speaker. I have simply a word or two from the heart to say, if I may. I am not the only one who has housing cases brought to his "surgery". London Members nowadays have far more to cope with in that way than anyone who sits, as I do, for a provincial constituency; and so do Members for other large towns.
It is absolutely shocking to hear the right hon. Gentleman, lately the Minister of Housing, say that no more council houses can be built because of problems of construction—presumably, because there is not enough labour for the purpose—when offices and private houses are being built all over the place. In every plain and honest sense of the word, it is wrong that that should be said to those who seek council houses and cannot get other houses in places like London and the big towns.
If, when we are considering the Government's expenditure as a whole, we find that the figure for housing is about the only figure of major importance that definitely goes down, we can say that we have come to the heart of this Government and the real hub of the White Paper. The Government will not spend sufficient money for the social services. The social services do not pay immediately; their financial performance is difficult to measure and, say the Government, we must test performance more and more by financial criteria. I am inclined to say to the Government, as one might say to a private person, "You cannot carry it with you". This allocation of the resources of the country is a passing thing. It must be done from


time to time without too much regard to the remote past, but with a very clear appreciation of what the present is and what it means.
The present here, in health, means the hospital patients. In education, it means the young, in their overcrowded classes and their old schools. In housing, it means the long lists of those who cannot find a home of their own in the centres of our civilisation today. I say to the Government and all their supporters that, if they do not modify the proposals in this White Paper in the sense of setting more value on what is right towards those people, then, talk as they may about their financial soundness, no one will believe them. We shall all feel, as I feel, that this is a fault of the heart and of the judgment, and that such proposals cannot and should not be approved by those who have the interests of ordinary folk in mind.

5.3 p.m.

Mr. David Webster: The hon. and learned Member for Kettering (Mr. Mitchison) has followed my right hon. Friend from Department to Department, and he has brought his own panache with him. He told us, in Oliver Twist terms, that we have not got enough of everything, and at the same time he derided the low level of investment in this country. One of the reasons for this low level of investment is that so much, as he said, has been put into that part of the economy which is not remunerative and, as a result, there is no profit to plough back. As ploughed back profits are one of the leading forms of investment in this country, the hon. and learned Gentleman has cut down the tree which he wishes to grow.
It is impossible to refer to the White Paper Cmnd. 1522 without referring to Cmnd. 1337, on the Financial and Economic Obligations of the Nationalised Industries. I welcome the fact that during the last year and a half, since my right hon. and learned Friend became Chancellor of the Exchequer, there has been a long hard look at the public sector and at the nationalised industries in particular. Since the various nationalisation Acts, we have had the Herbert Committee examining electricity, the Fleck Committee examining the National Coal Board, and the Select Committee of this House on the

Nationalised Industries examining in turn the Coal Board, the Airways Corporations and the British Transport Commission. All those Committees have made valuable Reports to the House. It is right at this time, fifteen years after these sectors of the economy became nationalised, that there should be new thought about investment in the public sector.
I am one of the first to recognise that much in the nationalised industries must be of a non-commercial nature. Much of what they do has social undertones, and much of their activities has characteristics of local or national monoply. For these reasons, pure commercial purpose must be kept under control, but I think it is a proven fact today that in the nationalisation Acts of 1946–51 excessive emphasis was placed on the operational, technical and social aspects rather than on the commercial. As a consequence, many of the social aspects, as we see today, have been reduced because of the lack of ability of the industries to do what they set out to do.
There are other long-term factors which have brought about capital starvation in many industries in the nationalised sector. Since the regrouping of the railway industry in 1923, there has been capital starvation almost throughout the whole inter-war recession, throughout the war and after the war as well. I recognise that, but I feel that, as a consequence of both the factors to which I have referred, the intention of the Socialist Government in 1947 in regard to transport has been stultified. Public investment is out of balance in this country for the reasons I have given, and also because it is excessive for the resources of the nation.
It is vital to refer to paragraph 11 of Cmnd. 1337 to see to what an extent public investment in the nationalised industries depends on the savings of the rest of the community. In 1954, the nationalised industries were dependent on £290 million of public savings. In 1959, two years ago, that figure was very nearly double, at £570 million. If one were to project the pattern into the future, the result would be absolutely horrifying—in two years £1,100 million, and in 1968 £2,000 million.
Having listened to my hon. Friend the Financial Secretary writing off


hundreds of millions of public money last week, I think we should all agree that these things can get out of balance and become completely unrealistic, with very detrimental effects not only for the industries themselves but for those people who are trying to work in them. I welcome very much, therefore, that we have a five-year plan to balance these projects with the resources of the nation.
It is realistic, also, to have a year-to-year reappraisal on a short term basis—a tactical rather than a strategic approach—because such a procedure not only gives flexibility in day-to-day or year-to-year management but enables us to test matters against the temperature of the economy itself. It is right also that the nationalised industries should themselves take into consideration their financial contribution to the nation.
Again, in this five-year appraisal—on a smaller scale, I acknowledge—I should like there to be a consideration of existing investments, to examine whether they are remunerative and, if they are not, whether there is a social or other purpose giving ground for their retention. There is a great deal to do in this respect inasmuch as the costing and valuation of these industries is in many cases years behindhand. I am not at all surprised to find that successive nationalised industries are employing accountants to look at their financial situation today.
As I have said, we wrote off a tremendous amount of capital last week. I am very concerned, in particular, about B.T.C. and the last valuation put upon its assets. In the last accounts of the B.T.C., in Table V-4 one sees that £29 million worth of assets represent land and buildings not in operational use. If one turns to Table IV-2 one finds that last year the net receipts from these were £4·9 million. That, on the face of it, is a highlly successful result, giving a 16 per cent. earnings yield before tax.
However, I have heard it said that those assets to which I have referred were last valued, at the very latest, in 1938 and were put on the books of the Transport Commission under the 1947 Act at valuation. These assets, being mostly property, will have increased and multiplied at least three-fold, in which

case they will have a valuation today of £75 million. That would bring down the £4·9 million to a 6 per cent. gross return prior to tax.
I stress this item because it shows today that our nationalised industries are without adequate valuation. We cannot tell what the assets are. With regard to the commercial aspect of these industries of which we are possessed I would say that there are only two things, the assets of the nationalised industries and the earnings they produce. It is urgent that we should have a consideration and a revaluation of the assets of the industries controlled by the country and then see what their actual earnings are. Only then shall we be able to tell whether we should keep the assets where they are, whether they are justifying themselves on economic grounds, and, if not, whether they should be kept on for social purposes, and, if not kept on for social purposes, then scrapped.
I heard with great interest that my right hon. Friend the Member for Blackpool, North (Sir T. Low), who was Chairman of the Select Committee on Nationalised Industries looking into the B.T.C., was very upset with the Government last week because no clear definition was given of the closing of branch lines. We do not have an up-to-date valuation of the assets and we do not know how much it costs to run a railway train in this country today. Until these factors are known, I do not see how the first-class recommendation of the Select Committee can be carried out.
It is vital that we should continue this process of having a five-year look beyond what we are doing today in roads—I welcome that—beyond what we are doing in hospitals and beyond what we are doing in schools. But I am absolutely convinced that until we have pruned those aspects of the nationalised industries that are not bringing a benefit to many people in our community we cannot really cut the public sector investment down to the things badly needed, as the hon. and learned Member for Kettering stressed, on hospitals, roads and schools. If we cut out the dead wood and remove it from the public sector of the economy then we shall get them.
All these things are urgent. We have had throughout the public sector of the nation's economy, ever since the 1914–18 war, capital starvation. As a result of it now everything is urgent. We have had a crash programme on the railways, we are having at the present time a crash programme on the roads and the next thing that is going to come up will be the result of the Rochdale Committee. As the hon. and learned Member for Kettering has very rightly said, we are going to attract the attention of the country in about twelve months' time to the urgent necessity of doing something about docks. It is absolutely vital. We are talking about exports. Some 99 per cent. of our exports go through the docks.
I predict that when the Rochdale Committee's Report is published there will be Question after Question addressed to my right hon. Friend the Minister of Transport pressing him to do something urgent concerning the docks. I beg him not to do it. I beg him to do it on a five-year basis. I hope that my right hon. Friend has started on that basis already and has been consulting closely with Lord Rochdale to find out on what basis it is to be done.
Having been round some of the docks in the last few weeks, I am very impressed by the urgent desire of those in the dock industry to get trade from other ports and more exports to this country. It is only by a reorganisation of many of the dock groups to keep a small unit where management gets closer to the men that we shall find a change in labour relations. Having in the past earned my living a bit in the Port of London and having been in smaller docks since, it is interesting to find that in the smaller docks the labour relations are much better than in the bigger ones where management and men cannot get together to discuss their problems.
A lot has been said recently about French planning. Like a lot of things that come from Paris, it is very fashionable to talk about it today. French planning was brought in at the very latest after 1945. It is only in the last two years that it has suddenly become successful and fashionable. I think that, probably, it has much that is good in it, but, at the same time, we British people should take

it with a pinch of salt and fit it to our own requirements.
I think, however, that both White Papers, the one we are discussing today and Cmnd. 1337, which is closely connected with it, are pointing a new way and are an instance of what my right hon. and learned Friend the Chancellor has done since he came to office. I think that these are vital. I think that anyone who has studied history would agree that the person who is successful is the ruler who keeps his aims within the scope of the nation's resources. His aims may be right up in the clouds, but unless his resources are adequate to meet them he will fail the nation, fail himself and fail those who follow him.
We in this country must not fall for the blandishments of the hon. and learned Member for Kettering and try to do everything at once. We must fit our aims into our resources and see that this time we have a balanced and sensible scheme.

5.16 p.m.

Mr. J. Grimond: The Amendment which we are discussing and the speech of the Minister both emphasise the connection between investment and expansion. But one of the difficulties of this debate is that the Government are not only engaged in enforcing a pause on pay but also a check on expansion. We do not know what their long-term policy is, but we do know that they have introduced this short-term stop-gap policy of the pay pause. The sooner the Government make clear their long-term methods the better, because the feeling is growing that some time in the summer the pay pause will end and that we shall then have inflation again. Unless by that time the Government have another policy to put before the country that may well happen.

The Financial Secretary to the Treasury (Sir Edward Boyle): The hon. Gentleman is not quite accurate. We are not having a check on capital investment. The measures introduced by my right hon. and learned Friend last July were specially designed not to affect capital investment more than was necessary, and at this time both public capital investment and private capital investment are rising.

Mr. Grimond: The Minister began his speech by saying that the main object


of the Government was expansion. I think it is common ground between us that the Government are not encouraging expansion throughout the economy, and one of their methods of discouraging expansion should, I think, be got rid of as soon as possible.
For one thing, the pay pause is unenforceable because, if they so wish, people will get round it very easily. In any case, the pay pause is unnecessary. Let the Government regulate or hold in check wage increases, but do not let them attempt to hold a rigid line right through industry. This will indeed defeat many of their purposes. A little earlier the Minister said that one of the difficulties of building houses was that the building industry was overstrained. What are the Government doing about it? They are going to restrict immigration from Ireland, if they can, which is one of the main sources of labour for the building industry. They will also, if they can, prevent the building industry from putting up its earnings in an attempt to draw labour into it. Again and again, we find that the Government's policies are quite inconsistent one with another.

Mr. Mitchison: In view of what the Financial Secretary has said, I notice from paragraph 17 of the White Paper that the increase in public investment
would have been greater but for action taken by the Government to hold back the rate of implementation of a number of programmes. This formed part of the series of measures taken in the summer of 1961. …

Mr. Grimond: I am obliged. I did not want to be led astray from my argument by that rather substantial will o' the wisp, the Financial Secretary to the Treasury. He was not, perhaps, being disingenuous, but he was going a little far in suggesting that the Government's Measures had not exercised any effect on what might have been done in the way of public investment.
I was about to turn to a point which was dealt with rather well in the speech of the hon. Member for Weston-super-Mare (Mr. Webster) when it was emphasised that, important as a high rate of investment may be, it is equally important to have the right kind of investment. One of the great troubles since the war has been that so much of our investment has been wasted.
We are in the process of writing off £1,200 million on the railways. Anybody who looks at the table at the back of the White Paper on the nationalised industries, Command 1337, will see that the return on their assets is much smaller than in the case of private industry. I know that the nationalised industries have different circumstances and I do not say that that is the absolute criterion for judging them, but it should make us look closely at how far the investment which the country has undertaken since the war has been the right investment. That is primarily the job which Parliament should undertake.
If we look at the current White Paper to see how the Government will exercise better control over the type of investment, we have to look at paragraph 8, on page 5, and I do not find it at all satisfactory. It throws no light on whether they have improved their techniques, whether they have followed up the sort of points made by the hon. Member for Weston-super-Mare and what new suggestions they may have.
There is a great deal to be said for some form of advisory investment board. To take a parallel case in the universities, the University Grants Committee works extremely well and holds the balance between the competing demands of various universities. I am not saying that the parallel in the investment field is exact, but it would be a great advantage both to the Government and to this House to have a board examining, say, the investment programmes of the nationalised industries, bringing out the sort of points that the hon. Member for Weston-super-Mare has mentioned—for example, whether their assets are valued up to date—and keeping the House informed of the balance which, in the view of the board, should be held between them. If that were done, the Board could also take into account the rate of investment in the private sector.
The Minister in his speech continually said that he was dealing with the public sector. Everybody realises that the public sector is under more direct Government control and that the private sector is under only indirect Government control. It is becoming more and more obvious that when 40 per cent, of the investment is undertaken


directly or indirectly by the Government, the relation between the two sectors is of prime importance and they cannot be treated in isolation. We do not have any body which is trying to look at them together for purposes of comparison.
We should try also to encourage different industries to provide such a board with much more information about their investment intentions. The hon. Member for Weston-super-Mare said that everything that came from France was not necessarily good, but we should at least look at what the French do. It is not only their Commissariat du Plan which is interesting, but the way they have a good deal of co-operation within industries and groups of industries and a considerable amount of information about their intentions which we do not yet have in this country.
I further believe that we must straighten our thinking on the difference between the social obligations, as they are called, of the nationalised industries and their statutory obligations to make ends meet. Like the courtiers of King Canute, we have gone on saying that nationalised industries must pay their way taking one year with another. Everybody ought to have known that they were never going to pay in the sense in which private industry pays. Only now are we getting round, in the case of the Transport Commission, to splitting off the paying routes from the socially important but unremunerative routes. This seems to me to be a process which must go on to a greater extent on the railways, and, indeed, in others of the nationalised industries also.
Any investment planning will, however, ultimately depend upon those who are doing it having from the Government a firmer plan for the economy as a whole. It is this long-term economic plan which, so far, we completely lack.
Another point on which I should certainly like information from the Government is the criteria that are applied to the investment programmes outlined in the White Paper. What are the criteria which determine the amount to be spent on the railways as against the roads? We appear still to be investing more in the railways than in the roads, which is probably the wrong way round. Who

compares the two? What is the criterion as between one form of road and another? Who decides, and how, that trunk roads come before an improvement in urban roads? A great many of the experts believe that the emphasis here too is the wrong way round.
Again, where is the consumer brought into this progress? Do the Government remember the importance of the consumer when investment programmes are brought up? Do they speak for him? Do the Government claim to represent him when investment plans are under discussion.
Finally, on this difficult subject of the planning of our cities, housing and other things, such as universities, which must be housed within cities, we are faced with the situation that the country is likely to need between 5 and 10 million new houses in the next twenty years but that the annual production of houses is running far behind the rate necessary to reach that figure. As far as I am aware, the Government have produced no ideas about how that amount of extra investment can be achieved.
One of the great difficulties, as the Minister knows all too well, is that it is not only a question of money. It is a question of what is to be done with the towns and cities, how to get the space, how to get the areas for rehousing and to put in the roads, and so on. It is essential that we should have a board or body which can hold areas ripe for development in cities until they can be redeveloped, either privately or publicly. This is not a new idea, but it is something which becomes increasingly necessary.
To illustrate that by my own experience with the University of Edinburgh, it is true that we should like more money for research and for all sorts of purposes. Even if we had a lot more money, however, we should still be faced with the question of clearing out suitable sites and rebuilding upon them. It is an extremely difficult problem. For one thing, there is no body which can hold such sites as are cleared until the whole area can be brought together. Secondly, for many institutions, among which universities are high in the list, we must have sites which are reasonably close together and close to existing buildings.
I beg the House to realise that there is an enormous amount of sheer physical development to be done in universities before we can increase the numbers in them. It is certainly also a question of university salaries and of teachers, but at present, in the University of Edinburgh, the facilities for teaching are inadequate in many ways. There are inadequate library facilities and, above all, inadequate facilities for students' accommodation. This comes on top of all the other needs in a town like Edinburgh. I emphasise again that it is not simply a question of money but a question of setting up some body which, as the sites become available, can hold them and gradually accumulate enough space to undertake this necessary redevelopment.

Dr. Barnett Stross: Will not the right hon. Gentleman agree that, as far as local authorities are concerned, in their desire to redevelop the centres of cities or other parts of towns and cities, more help would be given them if they were freed for this kind of purpose from annual public accountabilty, which makes it impossible for them to carry a deficit forward?

Mr. Grimond: I would certainly agree, and I am very grateful to the hon. Member, but I am sure that he would agree in turn that the financial burden which this redevelopment places on local authorities is beyond their capabilities, and that some new form of organisation is essential if we are to be able to tackle the tremendous amount of redevelopment for that purpose.
I want to reiterate what I said at the beginning. I feel that there is something more useful that we ought to do rather than look at particular items, about which many of us are unable to speak, and that we should look at the method by which the investment programme is arrived at. I do not believe that we have got it anywhere near right, and I say again that I very much agree with the hon. Member who spoke before me that all sorts of questions of accountancy and the difference between the social obligations and the statutory obligations of the nationalised industries, the way things are presented to this House, whether they can be handled by local authorities and or whether other bodies are needed, have

not been given sufficient attention. It is along these lines of how it is to be allocated and controlled in the next year or two, that I should like the Government particularly to bend their minds to the question of investment in this country.

5.32 p.m.

Sir Henry d'Avigdor-Goldsmid: As I do not suppose that I shall have the opportunity again of following the right hon. Gentleman the Leader of the Liberal Party, I should like to tender him my congratulations on his promotion, which in future I shall no doubt have to indicate from a more distant position.
Although I enjoyed his speech, I do not know how the faithful will react to it or what they are to make of his general attitude of bewilderment towards this White Paper and the issues which it raises. Frankly, his final discovery that we ought to have a council to discuss investment is not one which makes much appeal when one thinks of the number of White Papers that have emerged from the Treasury on this and allied subjects in the last twelve months. In this connection, I was glad my right hon. Friend who spoke for the Treasury mentioned the Report of the Plowden Committee, which is very relevant to what we are discussing now. I cannot believe that the addition of another twenty or thirty people, all with other things to do, would enable a clearer light to be shed on this situation than we have already.
I should have thought that, in the terms in which we are discussing the matter, we simply cannot make, and no council can make, a really positive act of evaluation as between the various issues that have been raised. All we can do is to say what proportion of the national resources should be made available for this purpose. After that, it must be an act of judgment, and I do not believe that any amount of confabulation can improve on that.
Lord Plowden, in his Report, Control of Public Expenditure (Cmnd. 1432), makes a very important statement on page 6, in which he says:
The total of public expenditure of all kinds, including that of the Government above and below the line, that of local authorities, of national insurance funds, and the capital expenditure of nationalised industries, represents about 42 per cent. of the gross national product.


My hon. Friend the Financial Secretary nodded his assent at the suggestion that the public sector was responsible for about 40 per cent. of what is described as gross fixed capital formation at home. We are dealing with a subject which concerns 40 per cent. of our national resources, and all I can say when I look round the House is that those who attend are few but fit.
I think we have to look at this question from the point of view of our total resources and from where the resources to implement these programmes are to come. They have to come from the private sector, or the central Government, or by borrowing abroad. According to the White Paper which has been referred to (Cmd. 1337), the private sector in 1959 contributed £1,000 million and the central Government £250 million in savings, making a total of £1,250 million. It is perfectly clear that if the Government can increase that contribution by having an increasingly large Budget surplus, it will be at the direct expense of the private sector and, as a result, the expansion that we all want to see in our national economy must be carried by the private sector. We come down to the question, if we invest very largely in advance and outstrip our resources, what becomes of us? So far, I have not heard any hon or right hon. Gentleman on the benches opposite advocate forced loans, so that therefore in practice this investment will have to be carried by borrowing, and because national resources are not available it will have to be carried by borrowing from abroad.
This, curiously enough, is what we are seeing in the local government field at this very moment. When the Government made it more difficult for local authorities to approach the Public Works Loan Board, this did not reduce the expenditure of the local authorities in the least. They turned to the short-term market and, as a result, their borrowing, and mainly from abroad, in the short-term market, has become very large. What is the implication of that? It is unmistakable. The local authorities are now the main repositories of what we in this House know as "hot money". This is money at two days' or seven days' notice. If there are doubts about sterling, that money is withdrawn quickly, and the local authorities turn

to the clearing banks to cover them. The clearing banks in their turn will certainly turn to the Bank of England if an awkward situation arises, and the net result is that the Treasury remains the lender of last resort. The Treasury carries the risk, because there is nobody else to turn to except the Treasury, if this crisis should develop. What has happened has been that instead of the Treasury having an immediate demand made upon it, it is in the position of virtually having underwritten very large loans of which it does not have direct cognisance.
I make that point because that is exactly the programme with which we shall find ourselves faced if we follow the principles laid down by the hon. and learned Member for Kettering (Mr. Mitchison), that is, of doing all the things we want to irrespective of where the resources are coming from. Incidentally, though the hon. and learned Member is not now here, I should like to congratulate him on his new-found interest in France. I am surprised, however, that he brought in France in connection with housing, because my experience of France, and I think that it is correct, is that it is a country where all development in housing has been hopelessly handicapped by really out-of-date rent restriction and where no houses are being built to let and where the housing situation is still incomparably worse than it is in this country.
The danger which we have to avoid, and it is a very real danger, is that in our humanitarian zeal and our desire to do justice to all these excellent causes that are presented to us we indulge in vast building programmes and vast expansion so that we are left with some of the follies that decorated our landscape in the eighteenth century, of which the most famous is Fonthill, a monument to man's recklessness rather than his power to help those whom he wishes to help.
Nor can we assume that present expenditure on many services will save expenditure in the future. I should like to quote the following from an article on the National Health Service in The Statist of 17th November:
The original assumption that National Health Service costs would fall as sickness


declined was a major error. The generally accepted view that the more successful medical services are, the more expensive they become was conceded by the Guillebaud Committee.
That point has not been made in the debate, but I think that it has particular application to the matters which we are discussing today.
Lord Plowden's Committee on the Control of Public Expenditure has a good many things to teach us on this matter. The Committee claimed that the principles of control should be as follows:
Regular surveys should be made of public expenditure as a whole, over a period of years ahead, and in relation to prospective resources; decisions involving substantial future expenditure should be taken in the light of these surveys.
There should be the greatest practicable stability of decisions on public expenditure when taken, so that long-term economy and efficiency throughout the public sector have the best possible opportunity to develop.
The Report added that:
The experience of recent years…is that short-term 'economy campaigns' and 'stop-and-go' are damaging to the real effectiveness of control of public expenditure.
It happened that the Plowden Report was in the Vote Office on 20th July, and five days later my right hon. and learned Friend the Chancellor of the Exchequer announced his revised plans. The question to ask ourselves here is how far this current review survives the principles which Plowden lays down. I would say that it survives them pretty well.
The fact is that the Chancellor's remedy has been the word "postponement" and in paragraph 20 of Cmnd. 1522, Public Investment in Great Britain, October, 1951, the word "postpone" or "rephasing" appears no fewer than five times. This seems to me indicative of slightly more than a mere change of mind. It is really a radical rethinking.
Apart from this question, I would say that this Command Paper stands up very well to Lord Plowden's criteria. My right hon. Friend the Chief Secretary to the Treasury referred to the Gas Council, and this brings me to a comment to which I should like to draw attention. Paragraph 33 of Cmnd. 1522 states:
The gas industry has placed proposals before the Government for the importation of liquified natural gas. If this scheme is approved, it might involve some increase in investment in 1962–63.

There was an interesting article in yesterday's The Times under the heading "Finance for New Tankers". It dealt directly with this plan by the Gas Council, which has very clear implications in connection with this White Paper.
This is a plan for financing £10 million being raised to cover the cost of two methane gas carriers which are to be on charter to shipping companies. The Gas Council will charter the vessels from the owners. The article in The Times adds:
No precise details of the arrangements have been disclosed, presumably because it is sometimes difficult to state the bald terms without being misleading. However, it is known that they are in accordance with what is becoming almost standard practice: the money raised will be repaid over the life of the charter. …
Indirectly through this the Gas Council is involving itself in a further £10 million of capital expenditure which is not controlled by the Treasury.
It is true that the project has been approved, but the capital investment of £10 million is being raised in the market and secured on the Council's covenant. There is nothing improper or immoral in that, but surely this is a precedent for any industry which is dissatisfied with the ruling of the Treasury to find a convenient way of getting round it.
I do not want to put ideas in anybody's head, but it surely would be feasible for the Central Electricity Generating Board to say that it needed to build a generating station but as the Treasury did not approve its capital plans for the building of a station it was turning to the private sector. It could then raise the money on its covenant and use the product of that generating station as long as required to satisfy the loan. This is a point which might deserve further consideration.
It is a consideration that the Treasury should make sure that its decisions in these matters, which vitally affect all of us, are effective. I am not criticising the Gas Council's decision. I am only suggesting that these industries are in a very strong position to be able to give their covenant, which is in fact a Government guarantee, and thereby increase capital expenditure which might not have been approved, and without having to obtain Treasury consent.
I come back to the point with which I started. On the balance between the


public sector and the private sector, I am perfectly clear in my mind that the private sector has to carry the public sector. Whatever the nationalised industries do, we cannot have an expansion in the public sector which is not carried by the private sector, because this would merely entail borrowing from abroad and perhaps borrowing on less favourable terms.
I have extracted the proportions between public and private capital for the past seven or eight years in what is called the gross fixed capital formation. In 1955 the public sector was 87 per cent. of the private. The proportion has now fallen. In 1960 the public sector was 68 per cent. of the private, and, judging by what we have heard of movements this year, the figure in 1961 may be about the same. In the first half of 1961, both the public and the private sectors have gone up by 8 per cent.
I suggest that in 1962 we are budgeting for an increase in the public sector of some £65 million or £70 million. From the company reports that we have read, I do not think that the private sector will be increasing in 1962 in the same proportion. In other words, there is a very grave danger—I do not put it higher than that—that the percentage taken by the public sector as against the private sector will increase significantly.
If we are trying to run a free economy, we cannot allow this. If, on the other hand, we prefer to have an economy which is entirely managed—as to some extent the French have now; they have been virtually under a dictatorship for three years—then, of course, it is up to the Government to do what they like. But if we are to run a free economy, the public sector has to be carried by the private sector, and if we cannot anticipate at least as much growth in the private sector, the expansion of the public sector will lead to nothing but disaster.

5.52 p.m.

Mr. William Hannan: The hon. Member for Walsall, South (Sir H. d'Avigdor-Goldsmid) asked us, rather pathetically, what would happen to us if we overspent our resources. I should think that the answer to that is that there would be another Tory Government crisis. I

should have thought that the present difficulty was the result of overspending. There has been a Conservative Government in office for the past ten years, and it hardly lies in the mouths of hon. Members opposite to go back eleven or twelve years to find a scapegoat for the miscalculations and mismanagement which have resulted in our having a crisis every two years. We had crises in 1953; in 1955, when we had a Budget after the General Election; in 1957, when there were "little local difficulties"; in 1959, and again there was a General Election; and after that there have been more financial difficulties resulting in the present situation.
As to what has been said about uncertainty and where we should go for loans, the Public Works Loan Board, under the present Administration, and at the behest of the Chancellor of the Exchequer, has made twenty-two changes in its rate of interest since the Conservative Government came to office in 1951. How can there be any certainty and any plan about what to do when we are in such a situation? The hon. Member was complaining about humanitarian zeal. If he would rather that we substituted inhuman apathy for that, he is entitled to that view.
Perhaps the best answer comes from a publication which is certainly not helpful to the Opposition. In the summer issue of Crossbow, an editorial read:
Indeed, many of the battle cries with which the Socialists were driven from office in 1951 may have to be discarded. The aim of 'setting the people free' has probably been followed as far as, if not further than, is possible in many fields of policy. In other directions, the pursuit of 'freedom' should certainly mean an extension of the rôle of the State. The whole business of managing our environment, of improving the quality of life, of providing decent cities calls for an enlargement of the duties of the Government.
If that is not the most blatant piece of chicanery after the onslaughts of the members of the Government in 1951, I do not know what is. But the present Government have thrown out the baby with the bath water, and they did that when they threw out many of the Acts which the Labour Government had passed, including the New Towns Act,


the Measures dealing with building licence control and financial control, and the Town and Country Planning Act, under which many of the improvements which could have been made in the past ten years have been forfeited.
Britain's economic expansion is among the lowest of any industrial country in the world. That is the key question to which the Government must direct their attention. My hon. and learned Friend the Member for Kettering (Mr. Mitchison) pointed out that Great Britain's annual increased production was 2½ per cent. compared with 4 per cent., 5 per cent. or even 7 per cent. on the Continent. It is there that we must seek the means of overcoming the difficulties which have been referred to. It is through increased production that we can do so. But the Government stagger from crisis to crisis with our resources when we might otherwise have achieved improvements in the social services mentioned in the Amendment—education, housing and health.
The fact is that our prices rise faster than do those of our competitors, and these higher prices in turn affect our exports. There is, however, no need to go over the whole of the economic field again. I would merely remind the House that in dealing with this White Paper we are trying to obtain from the Government some idea of what they propose to do in respect of the three services which I have mentioned and to point out to them that, in our view, the resources being devoted to education and health are quite inadequate to the purpose. I would also point out that this is being done by a Government who, in the 'sixties, in the latter part of the twentieth century, claims that they want to establish a better life, about which they are now moralising and preaching. They are telling the young people and the workers in our factories what they should do. The Government must look at all this and consider whether in, for example, the National Health Service they cannot do more than is promised at the moment.
Incidentally, it is interesting to note that in Scotland we are making just a little progress in health and building. In 1960–61 we shall have £75,000 more than in 1959, and in 1961–62 there is a projected increase of some hundreds of

thousands of pounds annually—£450,000, I think—over the figures for 1960–61. What does this mean? One hon. Member has already mentioned the reason for it—that we have had a programme review, as happened in 1955 and 1960. In fact, there is a slowing down of all building. For example, the Secretary of State knows that in the City of Glasgow only 50 per cent. of the births there take place in hospitals, compared with an average for Scotland of 80 per cent., with Aberdeen having the highest percentage. Maternity units and hospitals in Glasgow have been needed and demanded for many years.
It was in 1955 that a former Joint Under-Secretary of State for Scotland, who is now in the House of Lords, indicated a programme of about £300,000 to be spent on the hospitals in each of the following two years. My hon. Friends have been asking about these works, but they have not yet been completed because they have been postponed from time to time. But the programme was resuscitated before elections and afterwards forgotten. There is the matter, for instance, of a unit in the Western Infirmary in Glasgow. The former Joint Under-Secretary of State said that he had agreed with the Western Regional Hospital Board that this was a case of urgency and that priority should be given to it. It is not completed yet. He made that statement in 1956.
So one can go on. None of the achievements which it was claimed would be accomplished in the three-year programme has yet been completed. It was in 1960 that we were given the statement on hospital building, including capital equipment. The figures in the health report of the Scottish Office show that in 1959–60 actual expenditure on hospital building was £3,275,000 and for 1960–61 the estimate is £3,350,000–an increase of only £75,000. How much does one hospital cost? For the hospitals alone there is to be only another £75,000–this in the era in which we have never had it so good. It is a scandalous situation and the Government should feel shame for introducing estimates and figures like this in a paper of this character.
Do the Government fully appreciate the importance of the National Health


Service as a vital factor in our national life? There was an astounding article in the Sunday Times a week ago in which some of the factors were mentioned, factors which the Government are completely forgetting in their allocation of resources to the National Health Service. We know the huge numbers on the waiting lists and in outpatient departments, the buildings which are needed, and the shortage of nurses. Yet at a time like this the Government can be so profligate with the time of the House as to introduce such Bills as the Commonwealth Immigrants Bill which, possibly, will close a supply of nurses to our hospitals.
The Government point to the increased expenditure on the social services as if it were the only factor to be considered. But it is not merely a question of the amount of money which is spent, but of where it is spent and the directions in which our resources are turned.

Mr. Ian MacArthur: I am anxious to follow the hon. Gentleman on this important point, but I do not quite follow the figures he was quoting for hospital building in Scotland. The total on page 28 of the White Paper presents a very different picture

Mr. Hannan: The hon. Gentleman will find the figures in the Report of the Scottish Department of Health, on page 60 in paragraph 10.
I have said that the Government's inability to control the cost of living over the last eight years has been one of the causes of our trouble. The real amount, expressed as a percentage of the national income, spent on hospital buildings and health services has actually decreased. We are spending a smaller proportion on health than are other nations. It may be asked, "Why spend more on the National Health Service when it seems to be functioning satisfactorily?" If we were to devote more of our resources to it we could save money in other directions, because it is known that if only three out of every hundred workers could be kept at work instead of having to lie off, the increase in production resulting, and being maintained, would help to pay for the extra money spent on the National Health Service.
I turn now to education and the hon. Member for Perth and East Perthshire (Mr. MacArthur) will not quarrel with the figures I shall quote. On page 23 of the White Paper he will see that in 1959–60 the amount spent on schools in building and other expenditure was £13.9 million, and in 1960–61 it was £12.8 million. In 1961–62 it will be £1 million less—£11·8 million. No matter which way one looks at that figure, it means that the amount of our resources being spent on schools in Scotland has declined at a time when in Glasgow alone we need 1,200 teachers and when we have hundreds of overcrowded classes.
The Secretary of State will not deny these facts. This is a time when the education of our young people—our most precious investment, for they are our fighting line—is vital. Will anyone deny that in this changing world? There is need for increased technical knowledge. There is an increasing need for technicians and artisans to produce the things we need for our vital exports and to meet the competition of the world. Yet this is the time when the Government cut the amount to be devoted to our schools and, therefore, to education as a whole. That is a shocking and shameful thing to do in these days.

Mr. A. Bourne-Arton: The hon. Gentleman refers us to page 23 of the White Paper. He mentioned one line of the figures but not the next one. Would he agree that the next line shows increases in other services—from about £1 million to more than £5 million—which gives a total increase over the period for Scotland with a rise from £14 million to £17 million?

Mr. Hannan: I am aware of those figures but it is undeniable that the amount spent on schools has been decreasing. It is claimed that the building industry is overburdened, but on page 24 of the White Paper in paragraph 82 hon. Members will read that
In Scotland the pattern of expenditure is broadly similar to that in England and Wales … As part of the measures to restrain the growth of public expenditure and capital investment referred to in the previous paragraph, investment in schools will be restricted in the financial year 1961–62.
It could not be clearer than that. It has been argued that, because the building trade is overloaded, the Secretary of


State has decided that completions can go ahead but that no new starts should be made. The White Paper says, however:
In Scotland, where the building industry is not under the same pressure as in England and Wales, house building by local authorities is expected, on present trends"—
one would have thought that to be an argument for an increase, but no—
to continue to decline in 1962–63. Restriction of local authorities' expenditure will not be necessary unless an unexpected trend develops.
Where does the argument lie? On the one hand, the Chief Secretary to the Treasury argues that because of the overloading of the building industry in England and Wales the Government cannot make new starts, but in Scotland, where the building industry is not overburdened, houses and schools are not to start either.
The Crowther Report said of expenditure on education:
If it be regarded as an investment in national efficiency (as some parts of it assuredly are), it should be set alongside such annual investment items as £583 million (in 1958) for dwellings, £1,319 million for plant and machinery, £578 million for vehicles, ships and aircraft, or a total national annual outlay for fixed capital formation of £3,514 million
That case can be established, but although the Government can find time for the Street Offences Act, the Betting and Gaming Act, and for similar provisions, they cannot find time for dealing with these matters which are vital to the nation—housing and education and so on.
I know that time is going on and that other hon. Members are anxious to speak, but perhaps I may be permitted to make some remarks on the question of the University Grants Committee. The White Paper makes no distinction between university grants allocated to England and Wales and those allocated to Scotland, although it does with other matters. I should like to know why that is.
Has not the time arrived when the Government and the universities should exchange views about the country's social purposes? As the hon. Member for Walsall, South said, the number of graduates coming from the universities is far too low. How are we

to increase the number and find the accommodation necessary to meet the nation's social purposes? I am not suggesting interference with the universities' curricula, nor attacking their independence, but if the Government had an idea of the numbers of school teachers and scientists and others required, and exchanged that information with the universities, what could be done to achieve those numbers?
It is becoming increasingly clear to some of us in Scotland that, because there are only x places in the universities, only the best students at the senior secondary schools are being creamed off to fill the available places. By his actions following pressure from the Opposition and our speeches and urgings that young people should stay at school longer, not leaving at 15 but completing a full secondary school course to achieve their democratic right, the Secretary of State has presented us with this problem.
It has always been our claim that any lad or girl with the ability would find a place in a university. A student had to pass three higher subjects and two lowers. To interpret that for my English friends, he had to achieve three Advanced and two Ordinary levels and his place in the university was assured. That was the position until only last year. Indeed, young people were pressed to stay on at school in order to fill the places in the universities. But what has happened as a result of their staying on longer?
I have been in correspondence with the Under-Secretary of State for Scotland who deals with education about a case in which a young man had obtained four Advanced levels and one Ordinary level but had been refused admittance to a university. There are other similar cases. The reason is that even higher marks have been achieved by others in the examinations. Young people in Scotland have naturally expected that if they stayed at school and achieved those levels, they would get into a university, but they are finding, as has been the case in England and Wales for years, that there are not enough places for them all at the universities. We are not likely to get enough places for some years and that is all the more reason why the Amendment should be supported.
I have the greatest pleasure in supporting the Amendment, because the Government's shortcomings in education and health and housing are shocking beyond belief and should be discredited.

6.15 p.m.

Mr. Ian MacArthur: I listened to the hon. Member for Glasgow, Maryhill (Mr. Hannan) with great interest, because so much of what he said was centred on some of the major problems of Scotland. However, I question the colour of the picture which he has painted. He referred to the "shocking state" of the hospitals and education in Scotland.

Mr. E. G. Willis: Hear, hear.

Mr. MacArthur: The hon. Member for Edinburgh, East (Mr. Willis) says, "Hear, hear." A study of the figures in the White Paper shows that expenditure on major hospital projects in Scotland was £·8 million in 1959–60, increased to £1·1 million in 1960–61, almost doubled to £2 million in 1961–62 and is to increase by another 50 per cent. in 1962–63 to £2·9 million. That is hardly a picture of a nation in decline.
The education figures are similar. The hon. Member said that our prime purpose in Scotland was to introduce more technical education and to have a larger pool of trained people to carry industry forward to the scientific age before us. I agree, and I am delighted to see that at last the technical education programme for which we have been waiting is under way.
The hon. Member for Maryhill referred only to the school-building programme, but immediately below that reference in the White Paper there is a reference to "other services", including that very technical education programme for which he is looking. He must welcome the fact that in 1961–62 expenditure is more than five times as great as for the previous year and that total expenditure will increase from £·9 million in 1959–60 to no less than £5·3 million in 1962–63.

Mr. Willis: That is a decline.

Mr. MacArthur: To me £·9 million to £5·3 million represents a multiplication of five or six times.

Mr. Willis: The figures of £11·8 million and £5·7 million, totalling £17·5 million, are for the current year. The proposed expenditure for next year is the smaller figure of £17 million. Therefore it shows a decline.

Mr. Hannan: In paragraph 82 the White Paper says:
The provision for school building is based on the five-year programme envisaged in the White Paper"—
that is, the 1957 White Paper—
presented to Parliament in December 1958. Expenditure on further education is rising rather more steeply in Scotland because the programme of investment in technical education in Scotland, announced in the 1956 White Paper (Cmd. 9703), took longer to get under way than was expected.
It is the old story. When unemployment is at a certain figure, expenditure goes up, but then, when it is cut half-way back, hon. Members opposite say, "What good boys we are."

Mr. MacArthur: The hon. Members are reinforcing my point. The reference to "other services" covers technical education, and expenditure is to increase five times between 1960–61 and 1961–62. The decline is a minor matter of £·4 million in one year, and, in an increase of £5 million, that is small.
The hon. Member for Maryhill declared that the problem before us was one of overspending, and he then went on to ask that more should be spent. The problem is one of over-asking in that for two years we struck price stability and it was reasonable to hope that the need for the exercise of restraint had been learned In fact it was not, and whereas last year we paid ourselves about £1,600 million more in wages, salaries and dividends, production went up by only about £600 million.
I should like to consider expansion and production as the theme for my remarks this evening. There are a number of aspects other than those referred to by hon. Gentlemen opposite which affect the Scottish economy. I should like to raise one or two of them because of the vital part which public expenditure plays in the development of Scottish industry


and employment, and the even greater things which might result from some modification or redirection in the application of this investment.
As hon. Members know, Scotland's industry depends largely on heavy basic industries such as shipbuilding and engineering. Since the war there has been a remarkable diversification in the industrial pattern in Scotland, and this has provided a wider spread of employment than was the case before. New industries have opened up, many of them from America, and latterly the motor industry has spread into Scotland from the South. A lot of this diversification is due to the Distribution of Industry Acts, and, more recently, the Local Employment Act. Indeed, about half the aid given under the Local Employment Act has gone to Scotland.
By itself this diversification presents a picture of a vigorously expanding economy, and this is true with regard to new developments, but there is another side to the picture. It is that much of the progress is offset by the fact that the traditional basic industries are declining. Shipbuilding, for instance, employs about one-seventh of the labour force in Scotland, and its prospects are gloomy indeed. We know, too, that there are problems in the coal mining industry.
The immediate question that arises, therefore, is whether the present expansion in some sectors of Scottish industry is sufficient to balance the decline in other sectors, sufficient to arrest the migration of people South of the Border, or at least to attract an equal number into Scotland, and sufficient to provide employment for the natural rise in population.
I do not take the view that public investment in Scotland should be regarded as a matter of right because Scotland is Scotland, or that public funds should be used to bolster up industries which are dying. However, in the wider interest of the whole nation's economy it appears important that the potential for industrial growth should be fostered, especially in places which are some distance from the overcrowded South-East of England and the districts round London.
In the past the local rate of employment has been the criterion for deciding which areas of the country were eligible for aid under the Local Employment Act

and the Acts which preceded it. This is a reasonable basis because it directs industry to areas of hardship and to areas where surplus labour is available, but I wonder whether we have now reached the stage when other bases of judgment should be introduced into this process.
In that connection I call the attention of hon. Members to the Toothill Committee Report on the Scottish Economy, published a few days ago. The Report is a remarkable review of the problem which faces Scotland, and I think that we should express our appreciation of it. Chapter 20 of the Report reviews the working of the Local Employment Act, and says in paragraph 20.07:
If new industry is guided to wherever local pockets of unemployment exist without adequate regard to the possibilities of building up promising industrial centres or complexes, the full benefits to be had from attracting it may be dissipated. The build-up of industrial complexes and centres which offer prospects of becoming zones of growth"—
and I emphasise the words "zones of growth"—
cannot be the only aim but it should be one of the principle aims of policy.
In paragraph 20.08 the Report refers to the assistance which is available in Glasgow overspill reception areas, and it goes on to recommend
that the provisions should apply in full measure not only to the present development districts but also to the new towns in Scotland and to all Glasgow overspill reception areas.
I wholeheartedly agree with that view.
Paragraph 20.09 suggests further criteria. It says:
The relief of local unemployment should not be the only test. The basis of eligibility should be wide enough to ensure that no project is lost which is able to contribute to the economy by improving the employment position, directly or indirectly, in the short term or in the long term. A firm should be eligible for assistance if it is making a new industrial or commercial development, including extensions, that offers a reasonable prospect of additional output and employment or is transferring into a selected district from a congested district, provided it is not merely transferring from another part of Scotland or from one development district to another.
In this way, the rate of local employment would continue to be a factor in assessing eligibility for assistance under the Act, but other factors such as the important geographical zone of growth question, the nature of the firm's work, and so on, would be considered.
There is a great need for science-based industry. We also need to attract firms engaged in the consumer durable goods industry. These needs are such that surely aid should be available to new enterprises of those kinds wherever they choose to settle in Scotland. In passing, I trust that Scotland will receive a larger share of the Government's investment in scientific research than it has had in the past, because this would provide a stimulus to the development of science-based industry in Scotland.
I recognise that these wider bases of eligibility would not have as immediate an effect on local employment as the present system, but the long-term effect would be greater and would contribute more positively to the expanding economy which we want to encourage. Surely it is on this more distant horizon that we should set our eyes so that every aspect of planning can contribute to the achievement of the desired objective.
There is also a need for greater speed in deciding whether an enterprise is eligible for aid. At the moment, about four or six months elapse before a B.O.T.A.C. decision is announced, and this time lag tends to reduce the value of the inducement which may or may not be presented in the end.
The Local Employment Act is not the complete answer. Every aspect of governmental and local authority enterprise comes into the picture. Education, technical training—to which the hon. Member for Maryhill referred—housing, roads, and railways are involved. I sometimes wonder whether there is not a need for a larger measure of coordination in these matters.
In the transport debate some time ago my hon. Friend the Member for Edinburgh, West (Mr. Stodart) referred to the sort of problem that might arise with the present reconstruction of British Railways if the line to Peebles were to be closed while the Board of Trade was trying to attract new industry to Peebles. I hope that during the five years when the British Railways system is required to move from running at a loss to running economically the search for economy will not be such that lines are closed or services cut regardless of the potential industrial requirements of a district.
We may shortly enter into an entirely new trading age, with the entry of Britain into some form of association with the Common Market. If there is a likelihood of this—and it appears that there is—I wonder whether the significance of the move and its effect on Scottish industry has been considered within the general framework of the Local Employment Act and other measures of Government assistance and encouragement.
If we were to enter the Common Market, it seems to me, two conflicting factors would affect the expansion of the Scottish economy. Firstly, Scotland would become more attractive even than it is now to firms from overseas and outside the Common Market. Firms from America and similar countries might wish to set up a position within the Common Market, and they would be able to establish themselves in Scotland, with the benefit of all the advantages we have to offer, at the same time retaining the approachability—if we can call it that—which the west of Scotland and Clyde-side provides for the West.
Secondly, there would be a pull from the Common Market to industrialists who otherwise might extend into Scotland. It seems that we might have a double pull to contend with—not only the pull towards the congested south-east of England but the pull from the Common Market. If there is to be a review of the administration and workings of the Local Employment Act this and similar considerations should be borne in mind.
We must consider the operation of this sort of investment again, in order to make sure that it is making efficient use of the resources of Scotland. The efficient use of those resources surely must be critical to the whole economy of the United Kingdom. The slow rate of growth that has occurred in Scotland suggests that sufficient use is not being made of the potential there. Much of the improvement must come from within Scotland itself, but I suggest that by the redirection of aid and public investment the Government may be able to give a more positive lead to this move forward, and thus accelerate the speed of expansion and spread of that expansion in Scotland's economy.

6.34 p.m.

Mr. A. Woodburn: I wish to intervene only for a few minutes to follow up what


has been said by the hon. Member for Perth and East Perthshire (Mr. MacArthur). I have no quarrel with the Government in producing a White Paper which sets out a programme of priorities and an allocation of the energy of this country. The only trouble I see is that it omits a great slab of the economy which is left unplanned and in respect of which there is no allocation of resources.
I am aware of the great problem involved in introducing many detailed controls, but it must be patent to the Ministers that in a time of stress it is quite wrong that a great deal of luxury building should be allowed to develop. If there is a strain upon the building force in this country there is no justification for building unnecessary petrol filling stations, but they are now to be seen every three or four miles along the country roads. Nobody can say that they are necesary, but they have been built at a time when the Government say that we should be harmonising our economy and our energy to serve the essential purposes of exporting. The building of petrol stations has nothing to do with exports; it is a pure waste during a period of stress.
It is essential that we should save and not waste. One waste that now takes place within the community is that which is caused by idle people. Their labour is going to waste, and that loss can never be retrieved. Any labour that lies idle and which could be used is a waste to the community. Moreover, it is wasteful to employ anybody upon useless work. That may be an even greater waste than to have people who are idle. It is, therefore, essential that the Government should make a survey of the country to see that nobody who could be usefully employed is idle. The best type of employment is work that builds up our wealth for the future.
How should that principle be applied to Scotland? There are certain things in Scotland which would not involve great expenditure on the part of the Government and would not affect our balance of paments. First, there are the roads. In Scotland they can be built with material lying in the vicinity. The work can be done by labour that would otherwise be unemployed and wasted, and by machinery which, we are told, is lying in

the road makers' yards unused in many parts of the country.
It is obviously the business of the Government, by means of public expenditure, to bring together idle men and machinery and unused materials in order to speed up work on road improvements. That can bring nothing but benefit to Scottish communities. If we are to bring new industry to Scotland there is no reason why a great deal of unskilled labour should not be used in preparing sites for industrial estates or other buildings that will have to be erected to improve productivity. During this period of stress, when it is impossible to go ahead with the manufacture of consumer goods because that would overburden the economy and hamper the recovery of our balance of payments, the Government should take some steps in this direction.
I have been unable to understand this book-keeping economy, which does not get down to the facts of life. Why should Scotland, which has labour available, be punished because England is cluttered up with too much work and overburdened by orders? Why should the Government send all their orders to factories in the Midlands and in London, when the mere diversion of those orders to some places on Clydeside and other Scottish areas which need work would automatically stimulate development there without any capital expenditure?
If the Government are to engage in planning, this planning should not be on the basis of overall book-keeping figures which may give an entirely false impression because they do not apply geographically, or in a uniform way. The Government should sectionalise their planning. The control of capital expenditure by raising the Bank Rate is the bluntest possible instrument, because any raising of the Bank Rate may hamper the very industries that we wish to develop.
The White Paper deals only with expenditure through local authorities, Government agencies or nationalised industries. I should imagine, however, that the millions of pounds that were given to Colvilles to develop could equally be regarded as public expenditure. I cannot see how it can be regarded as private expenditure. The Minister said that it was private expenditure which went into private industry. Private industry is very


much dependent today on public expenditure, and if the Government are subsidising private industry, by giving the B.M.C. millions of pounds to redevelop at Bathgate and I think helping with the Rootes factory, and by providing industrial estates for private industry, as well as by financing agriculture to a great extent, can anybody suggest that this is not public expenditure and that the Government have no control over it? The range over which the Government could plan is much wider than that which the right hon. Gentleman has included today.
I do not think that it is right to make increasing demands, greater than the resources available to meet them, because that is like trying to take a quart of whisky out of a pint bottle, and it cannot be done. But there are in Scotland resources which are unused, whereas in England there are resources which are being over-used. The Government, through their public expenditure and assistance to industry, could divert both orders and factories from the Midlands into Scotland. That was a feature of the Toothill Report and of the Cairn-cross Report, and I cannot understand why the Government took no action along the lines of those two Reports.
It is sometimes difficult to get people to move their industries from England to Scotland; in spite of the benefits which we offer they do not all want to become Scots. To us that is incomprehensible; most people are proud to be Scots. Naturally, for some reason or another, Englishmen are proud to be English, and there is no reason why we should compel them to become Scots. But the Government could send some of the orders to Scotland. Public expenditure in this way in Jedburgh, the Borders, Inverness, Banff, Perth and other towns which need development would be an important step. It would develop industry there and it would mean that there would be less need to subsidise the railways, because people would live there and would use the railways. Scotland is being drained of the resources which supply the railways and the airports. This is a question of population and the way to solve it is not to close down railways but to get population into those areas to make the lines economic.
London is economic because everybody sends his office to London. All the offices are cluttered around London. Because we have 27-storey office blocks in London, that is supposed to be an economic justification for building new bridges, new railways and flyovers. It is the custom in industry to make the offices the most luxurious part of the works, and this is what we are doing as a country. We make London our office and shower benefits on it, and we starve the rest of the country. We build office blocks and bridges and everything else that London wants.
We should try to reverse the process and to send some of the population out into the country so that they can get the benefits of the country, including the benefits to health. In Scotland we can offer beautiful surroundings in which people can live. An example is east of Fife. There is a university, and it is almost a garden in the country, perhaps one of the most fertile areas in the world. The same can be said of East Lothian.
We can offer people beautiful situations for industry, places where they can enjoy their leisure instead of cramming themselves into tube trains and poisoning themselves on the way home at night. We can give them fresh air. They spend pounds in the summer coming to Scotland to buy it, but we will give it to them all the year round if they bring their industries there.
I hope that the Minister will extend his planning to a much wider field than that to which he has extended it so far.

6.45 p.m.

Mr. Basil de Ferranti: It gives me great pleasure to follow the right hon. Member for Clackmannan and East Stirlingshire (Mr. Woodburn). I have to some extent taken his advice. We have moved to Scotland, and, if I can make a useful contribution towards the Scottish section of the debate, may I say that I recommend this thoroughly to all other English industrialists who are thinking in terms of expanding their businesses and are looking not only for a beautiful place in which to put their factories but a part of the world in which people really work and which produces


first-class workmanship and first-class goods? I thoroughly support everything said on that subject by the right hon. Member for East Stirlingshire and the hon. Member for Perth and East Perthshire (Mr. MacArthur).
All hon. Members present will have enjoyed listening to another round in the series of duets between the hon. and learned Member for Kettering (Mr. Mitchison) and my right hon. Friend. It is pleasant to see the two of them back in action. I thought that on this occasion the round was won handsomely by my right hon. Friend. What he said was very much to the point—so much to the point and representing such a change in outlook on the part of the Treasury that I have had to remove from my speech some of the things which I intended to say. On the other hand, some of the things said by the hon. and learned Member for Kettering moved both him and the House very nearly to tears at one time, when he was considering the dreadful state of an economy which is enjoying about the second highest standard of living in the world. He managed to restrain himself at the last minute from finally breaking down, and we were able to reflect upon what he had said which, frankly, I did not find very constructive, especially when compared with the wonderful change of attitude which we have had from the Government Front Bench.
It is curious that the House is comparatively badly attended this afternoon and that comparatively few of the big guns on both sides of the House are in attendance.

Mr. George Brown: rose—

Mr. de Ferranti: I am sorry. I apologise to the right hon. Gentleman and also to his right hon. Friend the Member for Battersea, North (Mr. Jay) who sits beside him. I had not seen them.
Yesterday there was a powerful debate in which many of my hon. Friends urged the Government to spend more money, but none of them appears to be here today to take part in a debate which consists of considering ways in which we can provide more money for all these desirable things. The hon. Member for Glasgow, Maryhill (Mr. Hannan) urged us to spend more money,

but at least he has taken part in a debate which is considering ways of making the economy more productive. It should be mandatory upon anyone who urges the Government to spend more money to take part in the debate when we are considering ways and means of increasing the gross national product.
What strikes me most in reading the White Paper is its highly technical nature. Nearly all the expenditure being made under the various headings by the Central Electricity Generating Board, the Gas Council, the British Transport Commission and the Airways Corporations are for extremely technical and complex equipment. This tendency is likely to become more and more marked as the years go by. A figure which has always impressed me is that 75 per cent. of the scientists and engineers responsible for this technological change are still alive. As the years go by one can expect to find the technical content of the moneys listed in these White Papers becoming greater and greater.
Air Chief Marshal Sir Hugh Dowding said in 1940, at a critical time in our history,
The war will be won by science thoughtfully applied to operational requirements.
That was a most thoughtful and interesting phrase to use, and it is still true today. I can paraphrase it by saying that the 5 per cent. increase in the gross national product can be achieved by science thoughtfully applied to the requirements of today. Science is the all-important feature of the world in which we live.
I will quote another interesting figure from a paper read to the British Association by Dr. Bowdon in which he said:
The number of scientists in the world has doubled every fifteen years for 250 years. If this rate of progress were to continue and if the population of the world were to grow at the same rate as it is now doing for another 250 years, every man, woman and child in the world would be a scientist and every cow, every horse and every mule, too.
The essential growth of science in all those industries which are based upon science is occurring throughout the whole of Western society, but, unfortunately, in Scotland, as my hon. Friend the Member for Perth and East Perthshire said, and up to a point in England it is not occurring fast enough.
I had perhaps rather a naughty Question down for my right hon. and learned Friend the Chancellor of the Exchequer at the end of last Session. Arising out of this argument about the importance of science today, I asked him to tell me
how many of the second secretaries, third secretaries, under-secretaries and assistant secretaries in Her Majesty's Treasury hold degrees or qualification in physics, mathematics or engineering; and what percentage this is of the total numbers in the above grades.
My hon. Friend the Financial Secretary, who replied, said:
Seven, or about 9 per cent. of the members of these grades on the Treasury strength hold degrees in mathematics or physics. None is a qualified engineer.
This is relevant to what we are discussing today, because it is essentially the Treasury which has to take the very difficult decisions listed in the White Paper. One way of looking at it which is perhaps useful is to regard the Treasury as rather like a retail shop kept by a man and his wife. The man keeps the shop and makes the commercial decisions. The wife keeps the till. There are the two functions—keeping the shop and looking after the till. The Treasury's present organisation is very largely based on keeping the till. I think I am right in saying that it is largely based on the Gladstonian concept of saving candle ends. I am convinced that the Treasury staff and Treasury Ministers are very well equipped to do this. They do a very good job indeed because they know what a candle end is, but do they know what a cascade tripping is on the national grid? Do they know really what the subject of magnetohydro-dynamics is? Could they honestly invert a matrix of linear differential equations? I doubt it. I am willing to give way to my hon. Friend the Financial Secretary if he wishes to refute what I have said.

Sir E. Boyle: I could not tell my hon. Friend these things, but I think I could undertake to find someone in the Treasury who could.

Mr. de Ferranti: I am very glad to hear it. Perhaps it is one of the seven. If so, he must be very overworked. They could do with some suggestions. I certainly should not like to bother them at this time with imposing additional

work on them. This is a fair thing to say and I say it with very great deference because I am clear that the Treasury has some of the very finest brains in the country and they do a magnificent job. There is a tendency to regard some of them as being faceless men sitting at the centre of power and pulling the strings. When we meet them we cannot fail to be impressed by them. They are unquestionably of the very highest calibre, but the fact is that they are hampered in the work they bother to do so well not only by the structure of Government but by their own educational background.
Seven technically qualified people in the Treasury simply are not enough to deal with the immensely complex decisions detailed in the White Paper. To perform this till-keeping activity they must recruit some more qualified people. I admit that it is difficult to recruit qualified people. After all, if someone has trained as an engineer or as a physicist the last thing he wants to do is to go and work in the Treasury. He wants to work as a physicist or as an engineer. But the fact is that there is an urgent need for recruiting these sort of people in the Treasury. The problem must be tackled by the Civil Service Commission, which must offer whatever salary is necessary to attract these people when they are young or whatever is necessary to attract them from industry where they may now be found.
In reply to my supplementary question my hon. Friend the Financial Secretary said:
This is a big question which we might profitably debate another time."—
I hope that this can be the other time—
A great deal of thinking is being done about the importance of skilled and qualified advice to Ministers. In the Treasury we receive today far more rigorous advice on economic questions than might have been the case 20 or 30 years ago."—[OFFICIAL REPORT, 3rd August, 1961; Vol. 645, c. 1629–30.]
I should think they ought to. It is overdue.
This is the point in my speech where I must leave out some of the things I had to say because my right hon. Friend the Chief Secretary in his speech this afternoon gave every indication that the Government have realised the way in which the economy ought to be run and


are soberly and sensibly adopting a new approach to the problem of running the country. Part of this new approach follows from the admirable Report by Lord Plowden and his Committee, in which four main recommendations were made. The Committee's first recommendation was this:
Regular surveys should be made of public expenditure as a whole …
I think this is now being done. The Committee recommended, secondly:
There should be the greatest practicable stability of decisions on public expenditure …
This is being done, or is proposed to be done. The Committee's third recommendation was this:
Improvements should be made in the tools for measuring and handling public expenditure problems, including in particular major simplification of the form of Estimates … These should serve both to improve the work inside the governmental machine, and to contribute to a better understanding by Parliament and the public.
This is perhaps not yet being done as effectively as it might be. Perhaps some of the new brains which the Treasury may recruit at my instigation will be able to get on with it. The Plowden Committee recommended, finally:
There should be more effective machinery for the taking of collective decisions.…
This point does not concern us today.
It is clear that the Treasury cannot cope with all these things. I do not believe that it has sufficient staff. I do not believe that it has the staff with the right qualifications. I think that the Chancellor of the Exchequer recognises this, as is evidenced by his proposal for a National Economic Development Council. This is an extremely sensible suggestion. This body under his chairmanship will, in effect, keep the shop while my right hon. Friend the Chief Secretary keeps the till. This is the stage at which the husband and wife simile had better be forgotten.
It seems immediately apparent on reading through the White Paper and considering the implications of Lord Plowden's recommendations that the National Economic Development Council will have a vital rôle to play in shaping the investment we are considering at the moment. Lord Plowden very sensibly expressed the need for caution. There is no doubt that this is true. We

can be carried away by the panache of the French, to which the hon. and learned Member for Kettering referred. We must be very cautious in applying the French system to the United Kingdom. We must soberly aim for a growth rate of 5 per cent. and not be foolish or foolhardy in the way in which we approach the problem. However, there is some danger in overdoing the caution on certain aspects of what planning could do for us. It is important not to fall into a trap. It must be realised that national planning embraces every aspect of the economy. At the moment we are considering the public sector. If one is to plan effectively for the public sector, one must plan for the private sector as well. Hon. Members opposite may say, "This is Socialism and what have you been doing all this time?" Planning in this context, as hon. Members opposite would admit, is very different from planning with the controls which would be proposed by the Party opposite. We have only to go to France to see what they have done. You have it on the authority of your own Front Bench—

Mr. Speaker: The hon. Member must address his observations to the Chair.

Mr. de Ferranti: I am sorry, Mr. Speaker. May I point out to the hon. Gentleman that it is on the authority of his hon. and learned Friend the Member for Kettering that, in fact, the French have been able to plan in France very effectively without any need for controls. What it is fair to say is that there must be some form of compulsion, but the compulsion that we are all facing now is the compulsion of competing in the Common Market. This is immeasurably more effective than the sort of compulsion by dictatorial powers that would be proposed by hon. Members opposite.
If the planning of investment is to be fitted into the national context, it is essential that this problem should not be nibbled at. The public sector and the private sector must be looked at in some detail. Obviously, this requires quite considerable organisations. The second tier of the office proposed by the National Economic Development Council will be quite an organisation in itself. The French have found—I think that they are right—that they will need at least 25 Commissions with power to appoint


ad hoc working groups and they have appointed no fewer than 250 working groups to look at the details both of the public and private sectors. I do not believe that our own efforts can succeed and be sensible and practicable unless we have a comparable number of groups in the United Kingdom.

Mr. Woodburn: Is it not a fact, apart from what is being done in the future, that the French have taken the whole region of the Rhone Valley, planned it, and brought the land there from being wild gorse and heath into what is practically a horticultural garden? They have done all this by using water power and planning the whole region on a national plan. It is a remarkable development. That has already been done and there has been no question of waiting for commissions.

Mr. de Ferranti: I agree that it is a remarkably inspiring sight. The point that I was making was that the sort of development that takes place as a result of planning is very detailed and involves the co-operation of a large number of people. There is not only the example of the Rhone Valley. There are numerous examples of the way in which French people have got together, decided that they would aim at a growth rate of 5 per cent. and have done it. I do not believe that we can do it in this country without the equivalent of 25 commissions and 250 working groups actually consisting of people who do the job getting together and working towards a common objective. It must be remembered that these French groups are not executive groups as such. They have no powers in themselves. There is no question of compulsion. These are groups of people composed of the men whose actual job it is to got on with these various projects, to get together, work out a common approach and then get on with the job.
In the first instance, their main function is to collect the information; the actual preparation of the growth plans which they have and the sending of them through the commissions to the Commissariat itself. This collection of information enables everyone with responsibility in a particular field to make his own personal decisions in the light of that information and in the light of the overall framework and to feel part of it. This is an important thing. Planning in

France is essentially a public relations job—it is a sort of pulling oneself up by one's own bootstraps.
It alarms me somewhat to feel that in this country we shall handle it by following Lord Plowden's advice:
It is therefore doubtful whether any Government will feel able to place these surveys before Parliament and the public.
That is quite wrong. The whole point of having surveys is to be able to place them before Parliament and the public, so that everyone can feel that they have a share in what is going on, can make their decisions in the light of this information, and can contribute. It is in fact only by publication that we shall be able to achieve effective planning. Without it it would be quite disastrous.
The other aspect of the planning proposals—the keeping of the shop side of the Treasury's activities—is that it could well fail if the technocrats in the office itself should not be able to talk with and understand their opposite numbers on the till-keeping side, as it were. They may well all have been to Balliol, or to one of the red brick universities or to Cambridge and it may be that they will thoroughly dislike one another. This is quite a serious problem that will have to be considered. I think that the re-staffing of the till-keeping side of the Treasury is rather important so as to make sure that both sides know what they are talking about.
I now turn to another aspect of the investment expenditure described in the White Paper. The present problem is to what extent the nationalised industries in making their large expenditures should have regard to the national interest. I know that this is very relevant at the moment with regard to the pay pause; but that is not what I am interested in at the moment. The White Paper published on the financial and economic obligations of the nationalised industries shed some welcome new light on this problem. It made a cautious suggestion in rather a coy way that it would be a good idea for the nationalised industries to make some more profit. That one can and must agree with. But when one bears in mind the ratio of increased output to investment in the public sector is only one-sixth of what it is in the private sector, one realises that some new thinking is


overdue. It is not only that the investment in the public sector itself, which one would expect to be somewhat less productive although not as unproductive as that, is tending to reduce our national growth rate; it is the actual way in which this money is spent. It is the effect of this investment in the public sector on the private sector which is supplying the equipment to meet the needs of these giant industries. When a nationalised industry is placing orders it tends to be unfortunately true that it is very frightened, and naturally so, of the sort of difficult decisions involved in improving the competitiveness of its suppliers. Quite frankly, orders tend to be placed more with an eye to the social consequences of the placing of those orders than to the economic consequences. On the whole, it is less trouble for the nationalised industries to pay a bit more for what they buy than to adopt a policy which although tending to make for more efficient production also tends to threaten their suppliers with making uncomfortable readjustments.

Dr. Alan Thompson: This is an interesting and serious point. Has the hon. Member any evidence of any chief purchasing officer of any particular nationalised board who is in fact working on these criteria when purchasing?

Mr. de Ferranti: No, I think that the hon. Member misunderstood what I was saying. The purchasing officer when making a purchasing decision will choose the lowest tender, but it may well be, and frequently is, that this is not the most economic way of purchasing equipment. It may well be that another firm investing more in research development than the firm quoting the lowest price should be supported.

Dr. Thompson: When the hon. Member spoke of social criteria in purchasing, I thought that he meant rates of unemployment in areas of industry. This does not influence nationalised industries purchasing. Indeed, it might be a good thing in some respects if it did.

Mr. de Ferranti: No, there is nothing of that, but does the hon. Gentleman know the purchasing policy of Marks and

Spencer? It is a magnificent firm, but it is very tough in its purchasing policy. Firms that do not come up to its standard just do not get any more orders, even though, in some cases, they may be quoting the lowest prices. We must have a very much more intelligent purchasing policy, although it is difficult, on the part of the nationalised industries.
It is not wise just to take the lowest price. To do so is to miss the facts of modern industry as they are. One must be much better informed about the whole structure of the industries with which one is placing orders. One must know what is going on, and who is spending what on research arid development, and what the investment plans are. To place orders with the lowest bidder just does not work and can, indeed, be disastrous, and I am sure that anyone with experience of purchasing in the nationalised industries would support me in what I say.
This is an incredibly serious problem because it affects our competitiveness. If we are to compete in the Common Market, if the negotiations succeed, the nationalised industries, with their investment, will have to play a critical rôle in helping their equipment suppliers to achieve economies and competitiveness.
I think that I can best illustrate this by quoting some figures in relation to exports. They will also illustrate the importance of the problem. It will be seen from the table in paragraph 10, in page 6, that the National Coal Board had an estimated expenditure out-turn in 1960–61 of £94 million. One can only estimate roughly, but one would guess that of that sum about £58 million was for equipment which is very comparable to the sort of equipment which could also be sold overseas. In fact, only about £3 million of such equipment—about 6 per cent.—was sold overseas.
The Post Office probably spent about £82 million on comparable types of equipment, and the supplying industry to the Post Office was able to export £19·4 million or, roughly, 24 per cent. The Electricity Council, area boards and Scottish boards, in my estimate—which might be quite wrong—spent about £150 million on exportable equipment, and their supplying industries exported about


£85 million. I cannot help but feel that the export performances of those supplying industries could have been better, and that they would have been better if the nationalised industries had had more understanding of their problems—

Mr. Edward J. Milne: Are not those figures a criticism of the private-enterprise firms which are receiving orders from the nationalised industries rather than a criticism of the buying system of the nationalised industries? In short, despite the orders the private-enterprise firms are getting, they are failing to use them to advantage in order to move into other fields.

Mr. de Ferranti: I think that some blame lies with private industry, although the nationalised industries must also be blamed in part. On the other hand, when one talks to people doing these jobs on both sides, one realises how incredibly difficult it is, in the present framework, for them to be sensible.
The hon. Gentleman's intervention leads me to the working groups which might be established by the National Economic Development Council. I think that these could, in some instances, be composed of representatives of the nationalised industries, Government Departments and the like, who could then say, "We have to compete with Germany, France or Italy—what do you want us to do?" I am quite convinced that if that were done innumerable things would emerge that could be done—all sorts of things which one is hamstrung when trying to do at the moment. They could be got on with sensibly and practically, and at reduced risk, and without unnecessary investment, research and development expenditure, and so on, which would enable us to compete with the Germans.
The fact is that throughout a very large sector of this part of the economy—and it is a very considerable part of our economy—the size of the largest firms vis-à-vis the largest firms among our potential competitors in Europe is simply not large enough. We know, of course, about firms of the size of I.C.I., but there are innumerable industries where there is not a firm of I.C.I. size which will be able to compete with its opposite number overseas, and some of the blame for this does undoubtedly

rest with the purchasing policies of the nationalised industries.
This is not really anybody's fault. It is just that there has not been a framework in which the firms within an industry could reasonably get together, but now that we have the Common Market on the horizon we must get on urgently with sorting out some of these problems. As soon as the National Economic Development Council gets going, the Chancellor of the Exchequer should talk on this point to the chairmen of the nationalised industries, the people concerned with Defence, and others, and ask them—as, indeed, he has the power to ask—to bear this aspect of the national interest in mind when placing this very considerable chunk of business.
Lord Plowden in his Report pointed out that, of the gross national product, approximately 42 per cent. of all the demand for goods and services arose from Government and Government sources. I believe that the first function of the National Economic Development Council should be to work on the problem I have mentioned. A solution on these lines would not only improve our national output to investment ratio but would enable us to achieve the 7·7 per cent. increase in exports that is required to achieve a 5 per cent. growth rate.
There is also the problem of the payroll tax, as it might be proposed, and the problem of investment. There is no doubt that business men making decisions on investment in productive machinery are affected by the value of their labour costs. If their labour costs are increased, business men are likely to spend more money on a given piece of productive equipment than they otherwise would.
Clearly, if there were to be just a payroll tax, it would increase the total taxation on industry, so reducing its overall competitiveness. If, however, there was a pro rata reduction in Income Tax and Profits Tax so that a firm in the end paid out in taxation no more than it does now, we should be able to achieve a greater competitiveness, and should be likely to achieve a greater and more profitable investment in productive machinery. I hope that the brief bit of kite-flying done in the last Budget


will enable the Treasury to collect enough information on how payroll tax should be worked to enable it to be introduced in the Budget this Session.
The investment programme described in the White Paper is the key to our survival. It is, perhaps, one of the most important bits of Government activity that could ever be considered and it is a great pity that there are not more hon. Members attending this debate. I feel, however, that the Opposition have failed to put their finger on what is important; and that, on the other hand, my right hon. and learned Friend is now clearly on the right track. Perhaps he can be criticised for having taken a long time to get on to it, but I am sure that everyone on this side of the House, and everyone in the country wishes him well in what he is now trying to do. If he can frame his proposals with an appropriate element of panache, I am quite sure that the whole country will follow him towards the haven of a 5 per cent. growth rate.

7.20 p.m.

Mrs. Barbara Castle: The hon. Gentleman the Member for Morecambe and Lonsdale (Mr. de Ferranti) made a very thoughtful speech, though I would not say that he was always thinking along the right lines. But he has obviously been giving serious consideration to the question of why this country's annual rate of economic growth over the past ten years has been so lamentable and has come to a conclusion which I certainly share, namely, that we need a new approach to the running of this country.
The hon. Gentleman went so far as to venture into the realms of the views held by hon. Members on this side of the House when he advocated planning not only in the public sector but in the private sector as well. I wonder whether the hon. Member for Morecambe and Lonsdale appreciates how incongruously his speech stands out from the other speeches in this debate? I am sure that his hon. Friend the Member for Walsall, South (Sir H. d'Avigdor-Goldsmid) will have him indicted for heresy in the 1922 Committee. He was giving us warning hints a short while ago that planning would mean dictatorship.
I was totally at a loss when the hon. Member for Morecambe and Lonsdale

said that his right hon. Friend had shown, by his speech today, that he was thinking on the right lines. In the turgid complacency to which the Minister treated us there was no indication that he has been probing into the causes of the relative economic failure of Britain under Conservative Governments. As I listened to the Minister's speech—and I am afraid that I do not know what his new title is in his new job: I feel like calling him the Minister for Economic Timidity—I felt as though I was attending a financial and economic nursery school.
The right hon. Gentleman's speech in opening this important debate sounded like a toddler's first steps towards the economic facts of life, for the right hon. Gentleman treated us to a series of platitudes which this Government have brushed aside in their activities in the past ten years and have snubbed my hon. Friends when we have pointed out their relevancy. Did the right hon. Gentleman really think that he was making a great revelation when he spoke about how growth must be our aim, that it must be properly shared and that there was need to increase the long-term strength of the economy? And then the right hon. Gentleman put to us the challenging question, almost pathetically; how does one get the balance right in investment? And he added that we must work out our long-term plans sensibly.
When the Minister asks such a question, are we not equally entitled to ask what the Government have been doing these past ten years? After all, they have been in control politically and economically. It is not for lack of advice from my hon. Friends that they have failed to take the necessary steps which, apparently, have now become faintly obvious to the right hon. Gentleman. Why is this country faced now with a catastrophic housing problem? I thought that the hon. Member for Morecambe and Lonsdale was a little unfair in his opening remarks when he sneered at the emphasis which my hon. and learned Friend the Member for Kettering (Mr. Mitchison) placed on the tragedy of our housing problem in what the hon. Member for Morecambe and Lonsdale called "the country with the second highest standard of life in the world". I do not think that phrase will


ring cheerily in the ears of London's homeless. Why are we faced with this catastrophic housing problem, and why is there no prospect in the White Paper of it ever being tackled effectively? Tile reason Les in the fact that this Government, economically, have not passed their 11-plus examination and do not know how to set about regulating the economy on a basis of expansion and growth.
Today's debate has given us the proof—if proof were needed—of just what is the fundamental difference between non. Members opposite and my hon. Friends Hon. Members opposite still have instinctively and intrinsically a defeatist attitude towards our economy. They do not believe that we can forge ahead, and when the hon. Member for Morecambe and Lonsdale took it as read that the Government are now going to go all-out for a 5 per cent. rate of annual growth over the next five years, he was assuming something that even the Chancellor was not prepared to assume in his discussions about President Kennedy's target in the O.E.C.D.
Great Britain, under Conservative rule, is frightened of growth because it is frightened of the only ways in which growth can be achieved. That is emerging vividly during this debate. When the Minister now says that long-term planning should be a normal thing, does he realise who has been advising him on such a course? My hon. Friends and I have been saying that over the past ten years. The right hon. Gentleman has had the power to do it, but after ten years of power he has not got down even now to the essentials of the sort of planning about which the hon. Member for Morecambe and Lonsdale was talking.
The simple reason why this Government will never introduce planning—why they never have and never will and, thus, will never get the growth which could stem from it—is because they have a complete phobia about controlling the economy. We have even had the right hon. Gentleman saying that no doubt there were better ways of regulating the economy and of getting this balance of investment if the Government were to adopt some form of Russian State control. Although the hon. Member for Morecambe and Lonsdale thought that parts of his speech had become unneces-

sary in view of his right hon. Gentleman's speech, we did not hear a word from the right hon. Gentleman about the French system of planning.
The French have been planning their economy for fifteen years, and no one can say that they have adopted the Soviet system. It is true that they have adopted, and have had in operation for years, highly developed techniques and mechanical methods of forecasting certain developements which would be consequential on the adoption of their plan. Those techniques are so advanced that the Russians have sent some of their experts to Paris to study them.
No one will pretend that the French economy or political life is run on Soviet lines. Yet the French have achieved by their planning methods fantastically superior indices of growth that have not been achieved in this country with its laissez faire attitude.

Mr. Raymond Gower: Is the hon. Lady not perhaps making too much of this point? Has she not noted that growth is dissimilar in countries such as Northern Italy, Austria and France, some of which practise planning and some of which do not. Might it not be that some of the reasons for the lack of growth are outside the control of any particular country? For example, could not the availability of natural gas in Northern Italy and hydro-electric power be concerned in this? Britain, Western Germany, Austria and Northern Italy differ tremendously both in the degree of planning and in their respective resources.

Mrs. Castle: I notice one thing clearly; the only country in Western Europe that has not shown sufficient growth has been the one under this Government. I was referring to French planning methods, because the right hon. Gentleman has been showing some tentative toddler's steps in the direction of the view that planning might have something to be said for it.
I happen to believe in planning methods. I quite agree that there may be differences of method, but the fact remains that most countries of Europe have left us behind. Some have planned economies and some have unplanned economies. There are different factors at work in different cases. There is only one factor at work in this country, the


factor of stagnation which we find once again reflected in the White Paper with its intolerably low targets for public investment on the industrial side and on the social services side. What terrifies me as I sit in the House during this debate is to sense the wave of complacency surging out from the benches opposite, complacency in the face of one breakdown after another in the standard of our social services compared with what they ought to be.
I take the French parallel because I happen to believe in planning methods. If the right hon. Gentleman had adopted the French method, we might have been a little nearer the French standard of achievement. When the hon. Member for Morecambe and Lonsdale says that we should not ask for increases in expenditure until we are prepared to talk about an increase in the gross national product, I must remind him—I am sure he knows it, since he has studied the matter thoroughly—that during the past ten years, 1951–61, the national product in France has been growing at the rate of 4·5 per cent. per annum, compared with 2·2 per cent. in this country.
I am sorry that the right hon. Gentleman the Chief Secretary to the Treasury is leaving the Chamber. I am sure that he would benefit greatly from what I have to say, particularly when I come to the subject of the housing achievements of France, Western Germany and other countries of West Europe compared with the total collapse of his own housing policy. However, no doubt he can be told afterwards about what I have said.
I am glad that the right hon. Gentleman has come back. I have certain questions to put to him which I hope the Government will answer during the debate.
I was saying that the national product of France has been increasing at the rate of 4·5 per cent. per annum during the past ten years compared with 2·2 per cent. in Great Britain under the Conservative Party. The increase in French industrial production during the same period has been twice as great as ours, and this has not been achieved at the expense of either the social services or exports. During the same ten years, French exports have increased by 63 per cent., whereas ours have increased by only 18 per cent.
The reason is simply that the French are not doctrinally afraid, as the right hon. Gentleman clearly is, of either the concept of public enterprise or the concept of public control and public expenditure. Indeed, as M. Massé, the Head of the Commissariat du Plan in France, said in his speech in this country last spring, it is the very existence in France of the powers of the State over industry which has made the achievements of French planning possible.
Moreover,
he said,
the State itself controls a large part of investment; not only the equipment of Government agencies themselves, but also the programmes of nationalised enterprises, and housing, in which private initiative is largely dependent on State aid.
He referred to that as one of the reasons why the French have been able to plan so effectively.
When I was in France a short time ago to study the system very closely, with economists and others who were particularly interested in it, it was pointed out to me that one of the operative factors in the success of the French plan is that 50 per cent. to 60 per cent, of all investments in France are public investments and, therefore, lend themselves to planning. There is also a larger public sector of industry.
The hon. Member for Morecambe and Lonsdale was wrong in one of his facts, as he was trying to explain the French planning system, when he said that there were, in fact, no controls over private industry under the French plan. If he has studied the plan, he must be aware of the very widespread State control of credit in France which has been the instrument enabling the planners to dictate, for instance, the renovation of the privately owned steel industry in France after the war through the use of selective credits and credits on specially favourable terms given on condition that industry obeyed the plans set down by the central authority. This enabled the modernisation programme to be carried through.

Mr. de Ferranti: It is quite true, of course, that the French do not have a money market as we have it, and they therefore have available to them, apparently, machinery for providing credit which we—luckily for us, I think—do


not have in this country. However, I am quite sure that the mechanism of our own money market in the United Kingdom is just as effective as the French system in making sure that industries do economically the sensible thing.

Mrs. Castle: The hon. Gentleman has undone all the good common sense he was talking in his speech. That really is a piece of arrant nonsense. Of course, our present private credit facilities in this country provide credit, but they cannot and do not do it selectively. They are not doing it to fit in with any criterion of central planning. They are doing it to fit in with the criterion of private profitability. This is what has bedevilled the situation here.
I do not pretend for a moment that the French plan has been selective enough. Criticisms can be made of the French plan. The reason for its failure at certain points which was expressed to me by many economists and experts lies in the fact that the powers of selective credit control have not been operated stringently enough. Where the French plan has broken down, this has been because the powers have not been used boldly enough to make private industry fulfil the conditions of the plan.

Mr. de Ferranti: Does the hon. Lady deny that there is a private profit motive in the French economy? I can assure her that the private profit motive in the French economy is every bit as important for achievement with them as the other matters of which she is speaking.

Mrs. Castle: The hon. Gentleman has quite missed the point. Under our British system, what investment is done in private industry is governed solely by the criterion whether or not there is an adequate profit at the end. If one is to have any effective planning at all, investment even by profit making concerns must be in the sort of industries and in the directions which will serve the national plan.
In France, there has been a failure in certain sectors. For instance, I understand that the French machine tool industry is in many respects as backward and inefficient as ours because there has not been a sufficient direction of credit into that sector of the economy. One of the drains in France's trading balance

has been her need to import too much machinery and machine tools from abroad, instead of developing her own industry. But this is because the powers implicit in the plan have not been used boldly enough.
Another sector where they are not being adequately used is agriculture. There has been timidity on the part of the French Government in seeking to deal with massive under-employment and hidden unemployment in agriculture and in dealing with the surpluses which French agriculture is producing but which France does not know how to dispose of.
The right hon. Gentleman in his opening speech gave us the classic case for public enterprise. I am sure he will be the first to admit that there are scandalous housing conditions in the large towns of this country still. Not only in London, but in Birmingham and many other of the great conglomerations there are scandalous housing conditions.

Mr. Charles Loughlin: And in the rural areas.

Mrs. Castle: They are all over the place, but they are most evident in some of our great centres of population.

Mr. Loughlin: I am not trying to whittle down my hon. Friend's argument.

Mrs. Castle: I accept that my hon. Friend is not trying to whittle down my argument but, rather, is trying to strengthen it. Therefore, I accept his correction.
The Chief Secretary to the Treasury has told us that there is nothing he can do about it. The White Paper makes clear, however, that investment in housing is actually going down. That is the central fact that has emerged. It shows the failure of the Government's own economic remedies for dealing with the problems which face the country. The White Paper tells us that the number of tenders for new houses approved during 1960 was smaller than in 1959, and the hon. Member for Morecambe and Lonsdale dares to talk about our having the second highest standard of living in the world. We are told that completions in 1961 fall below those of 1960 and the housing authorities have been told to hold back tenders in 1962. For 1961 to 1963, we are told


that any increase in the investment expenditure is unlikely. Beyond 1963, all is darkness because the Government have not yet produced even a four-year plan.
As far as I understood the figures given by the right hon. Gentleman, he said that local authorities would be allowed to complete 170,000 houses over the next 20 months. Am I correct?

Mr. Brooke: Not quite correct. There are 170,000 local authority houses in England and Wales either under construction or the tenders have been approved. I said that that was equivalent to 20 months' completions. The Government want those 170,000 houses to be finished as quickly as possible. Indeed, it is only a few months since I was in Manchester and encouraged Manchester to step up its output from the quite inadequate rate of 1,000 to 4,000 a year, which would be more worthy of its task.

Mrs. Castle: Are we to take it from that, however, that local authorities are not to be allowed to make new starts until these completions have been made? It is difficult to find out the Minister's housing target. In the light of the explanation which he has given us, his target for completions over the next 20 months is 170,000 houses, or a rate of 100,000 publicly-built houses a year. Does the right hon. Gentleman know what the Government of France have been doing in housing? Has he any concept of the high rate of public investment in housing which is not only going on in France and will continue during her fourth modernisation plan, but which has been going on there for years?
In 1959, France completed 320,000 houses, of which 292,000 were built with the financial help of the State. In 1960, she built roughly the same number again. The estimate for completions this year is 330,000 and she is planning a 25 per cent. increase in her investment in housing under the fourth plan from 1961 to 1965, which will enable her to complete 350,000 houses a year, with a larger number of rooms and an increase in the standard of floor space per house. This is possible because of the lavish State financial aid for housing in France.
Our Government say that we cannot have building controls because they would not be compatible with a free economy. But the Government control building every day of the week. They not only control it, on the one hand, by allowing the construction industry to become so overloaded that the completions fall behind. They also control it by the high rate of interest. The French have no hesitation in introducing building controls, but they introduce those controls to sweep away the problem of arrears of housing and not to worsen it. Under recent French housing legislation, the State lends money to local housing societies at 1 per cent. interest. It also lends money to prospective owner-occupiers to build houses for their own occupation at equally minimal rates of interest. It is only the rest of the builders—the private speculative builders—who are charged the market rate, varying from 5 to 7 per cent. That is the sort of building control which a Government who intended to solve the housing problem would apply.
In France, 292,000 of the 320,000 houses have been built by lavish Government aid of that kind. It was said to me that in France that speculative building is negligible. Those to whom I spoke wondered what kind of out-of-date society I came from when I spoke about the speculative private builder. I was told that in France the speculative private builder is responsible for only 20,000 out of the 320,000 houses. The Government of France have no hesitation in saying that rents should be low. Another way in which our Government try to clear the housing list is to make rents so high that most working-class families cannot afford them. That is not the case in France. It was explained to me by all the economists who are the orthodox supporters of the centrally agreed plan that they do not expect the worker to pay more than 10 or 15 per cent. of his wages in rent. That is a normal social service that the French are developing.
The Government have no plans for loans at cheap rates of interest and no crash programme to deal with the massive amount of human misery. They have no increased targets—in fact, theirs is a diminishing target—for the next two years. The right hon. Gentleman dares


to come to the House and say that the reason is that the building industry is already so overloaded that it cannot keep pace with any greater housing demand.
The building industry is overloaded, not with housing construction, but with the building of new offices, stores and comparatively inessential things. Just at the bottom of Highgate Hill, where I live, there is an area of substandard housing property. A great corner at Archway has been cleared. The cranes are there and the scaffolding is rising to the sky. What does the notice say? Does it say "Block of low rent houses financed with Government aid"? Of course not, not under the present Government. What it says is, "Block of shops and offices". That is going on in the heart of an area which has an urgent housing need.
Why do not the Government control that? Why does not the Minister see that Archway does not need a block of shops and offices? What it needs is a great block of working-class flats at rents that people on the housing list can afford.

Mr. Brooke: Did the hon. Lady put that point to the Socialist-controlled London County Council, which must have given planning permission for those offices to go up?

Mrs. Castle: I am putting it also to the Minister. Why does he not take power to ensure that inessential building is not permitted until the housing needs of the people have been met? He told us as a matter of philosophy in his speech earlier that building controls were incompatible with a free economy. He said to us when we raised this point that we were only dealing in this White Paper with the public sector. That is the best argument I have ever heard for saying that a large public sector is essential for the proper planning of this problem.

Mr. Mellish: Is my hon. Friend aware that on many occasions the L.C.C. has refused permission for office development on sites of that kind, and that the Minister's own Department has overruled it?

Mr. Brooke: That I can flatly deny, having been the responsible Minister for the last five years.

Mr. Mellish: I challenge the Minister on that—

Mr. Deputy-Speaker (Major Sir William Anstruther-Gray): Order. I think the House must remember that the hon. Lady has the Floor.

Mr. Bourne-Arton: Before the hon. Lady leaves the question of shops and offices, would she confirm—I think she was here when my hon. Friend the Member for Folkestone and Hythe (Mr. Costain), with his experience in building, gave the House the proportions of building nationally—that the figures he gave, and I have them here, show that housing represented about 24 per cent. of the national building effort, shops about 2·3 per cent. and commercial offices 2·7 per cent.? Therefore, a very small proportion of the national building effort goes to shops and offices.

Mrs. Castle: If my mental arithmetic is right, it still leaves a considerable margin for a substantial percentage increase in the amount of our building resources which could be devoted to housing, and if I were on one of the housing lists, I should be grateful for 1, 2 or 3 per cent., or indeed any increase, that woud enable this problem to be met.
Of course, I was challenged about the fact that there are economies other than that of France which are forging ahead. I quite agree, and indeed the hon. Gentleman who interrupted me referred to the rate of growth in West Germany. He is quite right, but the House should realise that not only the rate of growth in West Germany, but the rate of house construction in West Germany is going on ahead of ours. I was very interested to find that the West Germans, at the same time as they are expanding their investment in other fields, are leaving us woefully behind in the housing field, and that their house construction rate at the moment is running at over 500,000 houses a year, so that there is another example of how we are being left behind. This surely goes to show that when the Government say, as the right hon. Gentleman did, that we have to guard against public expenditure taking an increased share of our national resources, he is pulling against the trend in the rest of modern industrial countries, which appreciate that it is by an increase of public expenditure that they can get the


right distribution of investment and shift the emphasis of national development from inessential to essential purposes. That is why they are jumping ahead.
France, in her fourth annual plan, which is now being launched, visualises another increase in the rate of growth annually from 4·5 per cent. to 5·5 per cent., and there is no doubt at all, as M. Massé stated when he was in London in the spring, that far from public expenditure, whether on nationalised industries or on public services, pulling against this development of growth, it is an integral part of it. It is a vital stimulus throughout the economy, and this can be seen not only in the housing field, because the figures for French education are equally significant.
I see from the White Paper that we had an increase in our educational investment between 1957 and 1961 of 15½ per cent. During the same period, France's investment in education trebled. We have set a target for an increase in educational investment over the next two years of 6 per cent., but France has set a target for increased expendiure on her public services over her next four-year plan of 50 per cent., in which education will take its share.
In other words, other countries, by the proper organisation and planning of their resources, and not being afraid of public enterprise, public investment or public control, have been able to achieve vast increases in their social services—all this and economic expansion, too.

7.56 p.m.

Mr. Ian Fraser: If the hon. Lady the Member for Blackburn (Mrs. Castle) were as good at economics as she is beautiful in talking about it, what a jolly place this House would be. She is an admirer of many countries as well as her own, and I do not always follow her down these international paths. In any case, it would be wrong if I tried to pursue her this evening.
I want to try to make a speech which is the counterbalance to the speech made by my hon. Friend the Member for Morecambe and Lonsdale (Mr. de Ferranti). I think that perhaps if the House were to take that speech and the speech which I am about to make together, it would get a good deal of

balance on this very difficult subject. For my own part, although I think it is a very great advantage to have the pattern of public investment clearly set out, as we have had it set out this year and last year in the two White Papers, I doubt whether we have made sufficient progress yet in considering public investment as a whole, possibly, from the lack, hitherto and now, of an adequate system of organisation for making sure that it is so considered as a whole.
Many hon. Members who have spoken in the debate have emphasised what a large proportion of our total spending is accounted for by public investment. I know that hon. Members opposite would like it to account for more, but already it is equivalent each year in gross total to somewhere between one-quarter and one-third of the total of the Budget above the line, and it is equivalent to rather more than one-third as a proportion of the total of all investment, public and private. This is a high level, and it gives to public investment, so it seems to me, a great power to do us harm as well as power to do us good. This is the point which, it seems to me, the Amendment moved by the hon. and learned Member for Kettering (Mr. Mitchison) has missed. This is particularly so—this power of doing us harm as well as doing us good—because it seems to me that we may well require to have in the next few years which we can foresee an overall Budget surplus: that is to say, a Budget surplus which operates, so to speak, above and below the line.
Partly because of the intense concentration which presses on all of us in this generation of material growth, we are all perhaps too much disposed to an uncritical attitude towards investment in general. We equate it, though we are not wrong to equate it, with expansion and we seek to maximise it so far as it is compatible with a reasonable degree of stability. On both sides of the House we have all been guilty, and certainly I have been, of boasting how much we spend in a particular field, such as education or housing, as though it would be a truly valid criterion not only of our interest in the subject, and, of course, it is that, but of our actual success in promoting the real welfare of that subject.
We are all inclined to boast in this way, but surely we ought to consider


more carefully than we have been doing both our own special situation as a nation in this matter of public investment and the lessons which commercial private investment can teach us on the subject of public investment. Public investment inherently lacks some of the safeguards and the features which make private investment less full of potential dangers to the community than public investment can easily be allowed to become.
On the first matter, namely, the special situation in which we find ourselves as a nation in the matter of public investment, I think that we are sometimes apt to suffer from a lack of a clear picture of our own place, both our actual place now and our potential place in the future, as a nation in the contemporary world. However much the growth of European economic unity may increase in due course our economic strength—and I think that the odds are that it will increase it—we are not likely in any foreseeable period, simply by reason of our moderate size, to find it wise to try to follow either the American or the Russian pattern of investment.
The American pattern tends to be superabundant and lavish. It tends to go right across the board and to be to a considerable degree wasteful. The modern Russian habit of investment, by contrast, is in principle certainly equally lavish and equally superabundant but very sharply specialised. This is the point at which I want to take up the speech made by my hon. Friend the Member for Morecambe and Lonsdale. He talked about a cascade tripping and fascinating things like that. We are in a position where we in the House and in the Treasury and other Departments of Government need not only to know about a cascade tripping but also to appreciate very clearly some periods of our history which are less talked about than perhaps at the moment they ought to be.
I have particularly in mind the reign of the first Queen Elizabeth and our position then, because in some of its aspects it was curiously akin to the position in which we find ourselves today. I hope, therefore, that in the stocking of the Treasury there will, along with the scientists, be a historian or two. The world today contains two Powers

which are much larger than us and have far greater resources than we have, yet by reason of our own peculiar national characteristic, more than any other reason, we play and we have every intention of continuing to play a disproportionately large part in the world. Although we have large resources compared with most of the rest of mankind, we play this disproportionately large part in the world not by virtue of our being very rich but despite the fact that by the standards now prevalent in the world we are very poor.
This was in many ways precisely the situation in the period of the first Queen Elizabeth. In those days the State was run largely by the monarch on her personal account and from her own estate. Even foreign policy at its most critical stages had not infrequently to be changed or modified simply because we could not find the money on current account to pay for that phase of it. Yet—and this is the point which is relevant to our present situation—this perpetual economic stringency, and this is not unlike our situation today, did not hinder us from playing a vital and important part in the world at that time. It not only did not hinder us but it actually helped us in playing that part.
This is where I think I shall commend myself in some degree to the Opposition and to the hon. Lady the Member for Blackburn who talked about selective investment. Economic stringency at that time forced us to be highly selective not merely in our expenditure on current account but also in our investment policy. We were in that period of development, which is so relevant to our position today, as strictly selective in our public investments as the Russians are now. The finest example of that was the way in which we hived our resources, both public and private, into the main instrument of our authority in the world at that time, which was our fleet. There was a strictly selective concentration of investment, public and private, on those factors—as few as possible—upon which our authority and place in the world rested.
But, and this is surely the counterpart to that, even in that selective field, in that field into which we poured all the resources that we could muster, and to such a powerful effect, we combined


all the time a lavish investment with stringently cheeseparing economy in expenditure on current account. Even in the fleet, the pride of the Crown and of the nation, money was saved and cheese-pared beyond justification in the actual running of it. We concentrated and invested in a highly selective way, but we combined it with stringent cheeseparing on current account wherever we were able to do it.
We ought to consider the modern problem of our public investment very much from this point of view which stood us in good stead, however uncomfortable it was to live with, in that fruitful age in our history. We ought in principle to accept the fact that we must be highly selective in our public investment and that it is equally important that in these selective fields we should make lavish investment go hand in hand always with an official sternness and cheeseparing in the day-to-day administration of those concerned. That is not only because we have not the resources to do otherwise. If we look beyond the rather optimistic picture which is painted from the other side of the House about the possibilities of our economic growth into the reality, I doubt very much whether we shall find that there is any prospect of our ever having enough resources in this generation to do other than that. In other words, we need to use them where they will have full effect.
But there is another reason behind it which we perhaps face less often than we ought to do. I spoke of the lessons which we could draw from commercial investment. Commercial investment surely shows that of all investment which is undertaken a proportion of it always turns out to be pernicious. This applies equally in the public field and the private field; a proportion of all investment turns out to be pernicious and wasted. Some of it turns out to have been wasted and misdirected; some of it even turns out to have been positively harmful. So, equally, does it prove to be with public investment, by whichever party in power it is undertaken and whenever it is undertaken.
I have often wondered whether it will ever be possible, as our economic knowledge grows, to find a constant factor

—it would be an interesting intellectual exercise to try this—for the proportion of investment which generally turns out in the long run to have been wasted or pernicious. If it were possible to calculate that figure, I am not sure that it might not turn out to be larger than we think, perhaps as high as a fifth or a quarter of our investment.
If what I have been saying is right, it means that we ought not only, in the words of last year's White Paper on public investment, Cmnd. 1203, to be considering public investment programmes in relation to the total outlay proposed against the background of the economic situation but from a still wider point of view we ought to be—we must, I think, somehow contrive to be—much surer than we can be at present that we are spending the right proportion on the proper objects.
The proportions are well known to the House, and I will not weary hon. Members with them, but we are still investing rather more a year in the railways than in education. We are investing about three times as much in coal or in the Post Office as we are in atomic energy or the hospital services. I know that these things are easy to say but very difficult to resolve. Nevertheless, these are the facts. We are also investing far more in electricity than in any other field. That may be reasonable, or it may not. That is so in respect of all these facts and many others, which is abundantly apparent from the White Paper.
There are, of course, sensible reasons at various different levels of reasoning. That is what is so important in this matter. At the various different levels of reasoning one can always find sensible reasons for the state of affairs, but they are none the less reasons which need a great deal more public scrutiny and discussion than they have had during the last few years.
This is the burden of what I have to suggest to the House. I hope that as and when the Chancellor's new planning developments get under way they will be found to include arrangements for the close and systematic study of public investment priorities, not only from the ordinary relevant points of view but also from the very broad points of view and


aspects which I have been trying to adumbrate. These are clearly not things which can in the long run be decided by any office, commission or planning board. They run deeper than that. But the study should go on at the level of commission, planning boards or offices in such a way as to complement and contribute to the decisive work on this subject which, I think, must always be done by the House or which ought to be done by this House. I hope that if anything of that sort is achieved my right hon. Friend will ensure that the results of that work filter rapidly through into public discussion and into the making of public policies.

8.16 p.m.

Mr. Bruce Millan: It is a measure of the difference between the two sides of the House on this issue that whereas my hon. Friend the Member for Blackburn (Mrs. Castle) talked about the potential opportunities of an increased investment, and particularly an increased public investment, the hon. Member for Plymouth, Sutton (Mr. I. Fraser) began by talking about the potential dangers of investment. One of the charges that we make against the Government is that they have failed to take the opportunities available to them, or which ought to have been available to them, for the expansion of our economy.
When the hon. Gentleman says that it is very important that if we are to have these fairly high levels of public investment they ought to be properly scrutinised, I can only say that I very much agree with him. I am not one of those who think that any sort of public investment is necessarily a good thing. I am certainly all in favour of public investment coming under public scrutiny. But I ought also to add that I believe that what is good for public investment is also good for private investment. It will not be possible to run our economy intelligently if we pay attention simply to public investment and do nothing at all with private investment.

Mr. I. Fraser: I would agree to a considerable extent with what the hon. Gentleman is saying. But would he not also agree that an important thing about private investment is that to some extent

its faults have a self-cancelling effect? That is to say, the people who make wrong investment decisions tend to be driven out of the private investment field altogether, whereas that may not be equally so in the case of public investment.

Mr. Millan: That may be theoretically true, but I do not think that happens at all in the way British industry is organised now. The bigger the firm one is operating, the wider may be the range of one's activities. But it is possible for private industry to make a lot of unintelligent investment decisions and still continue in business. What the hon. Gentleman said, while theoretically true, does not represent the real position.
I turn to what the Minister said about long-term planning. My hon. Friends and I are, naturally, very intrigued to see this wholesale conversion on the part of hon. Members opposite to the principles of planning. While the right hon. Gentleman was not talking about planning the economy as a whole, he got as far as having five-year plans for public investment. That is the sort of thing that we have been pressing on the Government for a long time.
The right hon. Gentleman said that, once the plans were settled, it was very important that there should be the minimum of interference with them. I could not agree more. A great deal of attention was paid to this in the White Paper on public investment about a year ago, but in practice the Government are not really following out that principle in what they proposed to do during the summer to meet the present economic crisis.
The Minister said that it was necessary to have the five-year plans as flexible as possible. Again, I agree with him. I also agree with him when he says that it might be necessary for them to be revised every year to take account of changes in circumstances. But there is a great deal of difference between revising a long-term plan because of changes in real physical and economic circumstances and having to change it because of the vagaries of Government policy.
The trouble of the Government with the nationalised industries over the last five or ten years has been that the Government's economic policies as a


whole have been such a failure that they have had to interfere constantly in the public investment programmes of those industries. Last year's White Paper made it clear, as the right hon. Gentleman admitted today, that this is an extremely wasteful and inefficient way of dealing with public investment. It is true that the Government have said this year that they will interfere, at least as far as the nationalised industries are concerned, not with major programmes but only with what I imagine they will call "marginal items."
The main point about such items, however, is that if they are truly marginal the amount of economic effect that any sort of monkeying about with them can have is very little. I suspect that once the Government start interfering with a nationalised industry investment programme on the basis of going after marginal items which may reasonably be deferred, they will be doing nothing at all because the economic effect will be absolutely negligible.
However, figures can be adjusted either by the nationalised industries themselves—there are always devices open to them to put a better face on figures—or by the Government, I do not believe that this is, economically speaking, significant, and I wish the Government would give up the idea altogether of interfering in this way with the investment programmes of the nationalised industries. All this would not be necessary if we had a long-term plan for the economy as a whole. If we had such a plan—and this point has been made many times in the debate—it would have to cover the private sector as well as the public sector.
I shall not go into details about the sort of planning we need, because some of them have already been mentioned and I want to say other things later. But the very least we should be trying to get through investment is that the publicly-owned industries and the privately-owned industries make the same sort of estimates about the growth of the economy over the next five years or so. They are not doing that now. Each industry—and, in private industry, each individual concern—makes its own assumptions about the probable trend of the economy over the next five or ten years.
These estimates obviously vary very widely between one sector and another. We shall not get any sort of planning, as I hope the Government appreciate, unless, on this very important question of investment, we at least try to get the private as well as the public sector making the same sort of assumptions about the growth of the economy.
If they are to do that, and if planning is to be significant, then obviously the Government must play a direct part in the allocation of resources so that the needs of public investment in the nationalised industries and the social services bear some sort of relation to the needs of private industry. If the Government do this, then they must seriously look at the point put to them about, for example, the so-called strain on our building industry at the present time.
It has not seemed to occur to any speaker today that if there is a strain on the capacity of that industry it might be rather a good idea to increase the proportion of national resources allocated to it. After all, there is no sort of magical limit to the resources which can be allocated. It would be both possible and fair to increase the industry's resources. But the Government abdicated all responsibility on this question.
Figures have been quoted about office building, and figures can also be quoted for commercial building generally. There is a certain validity in these figures, but there are a whole lot of other things about building that the Government ought to consider. One of the simplest—and it affects me as a Scottish Member very much—is that the strain on the industry does not apply to Scotland. It is symptomatic of the maldistribution of our industrial capacity throughout the country.
The strain is in the south-east and the Midlands of England, and the reason why it cannot be met by adding to its labour force is simply that in these areas there is a strain on industry generally. If the Government had shown any real determination and vigour in the use of the Local Employment Act much of this strain could be reduced.
Again, an important question arises about immigrants in this connection. My hon. Friend the Member for Blackburn gave some striking figures


about what has been happening in France, particularly in the building industry and its work in housing. The significant thing, which I hope the Government appreciate, about these very fine figures—which have been achieved not only by France but by West Germany and other countries—is that in France at any rate a good deal of the expansion has come from the use of Italian immigrant labour. A considerable number of Italian immigrants are working in France and a large proportion are in the building industry.
All we have had from our Government in dealing with immigrants is the detestable Commonwealth Immigrants Bill which they are trying to put through. These other countries are welcoming immigrants. A lot of their economic progress in building and every other way has come from large numbers of immigrants. Yet we have a net emigration rate. But the only answer of the Government is to introduce this Bill.
The strain on our resources is obviously not, principally, public capital expenditure. The Chief Secretary to the Treasury said that it represented only about one-thirteenth between 7 per cent. and 8 per cent.—of the total economic activity of the total gross national product. Certainly that represents a big figure when taken as a proportion of investment as a whole, but it does not by itself—I am not here talking about public expenditure generally but of public capital expenditure—impose some sort of unique strain on our resources, as some Members opposite seem to think. Nor is there some natural level beyond which public capital expenditure cannot go without imposing strain on the economy, as I believe the hon. Member for Walsall, South (Sir H. d'Avigdor-Goldsmid) seemed to imagine. Nor should the same criteria be applied to each unit of public capital expenditure.
I was glad to see, in the White Paper, that some division of public capital expenditure has been made between the nationalised industries on the one hand and the social services and public services on the other.
Some hon. Members opposite seem to think that capital expenditure in the nationalised industries is a form of some sort of social service, but that is absolutely untrue. Capital expenditure in the

nationalised industries is part of the industrial investment and is extremely important from that point of view. To talk, as some hon. Members have, about that capital expenditure having to be borne, or having to be carried, by private industry completely misrepresents the position.
Some hon. Members have said that the nationalised industries have had an unfair share of the nation's capital resources. If the Government believe that to be so, will they say which industries in the nationalised sector have had an unfair share of the country's resources? It is noticeable that when hon. Members opposite talk in this sense—and the leader of the Liberal Party did the same thing—they almost invariably talk about the transport industry. There was a remarkable comment in the speech of the hon. Member for Weston-super-Mare (Mr. Webster) who began by saying that the transport industry—the railways—had been starved of capital since 1918 and who finished his speech by complaining that too much capital investment was going into the British Transport Commission.
Both those propositions are unlikely to be true. Taking the nationalised industries one by one, it will be found that they have not been getting an unfair proportion of the country's capital expenditure resources over the last few years. As a matter of fact, there have been many years in which the Government have been very glad of the capital expenditure of the nationalised industries, at periods when the capital expenditure of private industry has been extremely sluggish when the Government have wanted expansion of capital investment as a whole.
On the other hand, generally speaking, I do not believe that the nationalised industries have been starved of capital since they became nationalised. There may be one or two exceptions to that and I am not happy—nobody is—about what has happened in the transport industry. However, the trouble with the nationalised industries is not so much a starving of capital as the fact that they have been continual victims of the failure of the Government's economic policy as a whole. They have had continually to change their programme and have been continually compelled by


the Government to change their programmes because of the Government's failure to deal with the economy as a whole.
If the economy as a whole were prospering, the nationalised industries would be bound to get a fair allocation of whatever capital expenditure was going, because the economy could not run efficiently without their getting a fair share of the nation's capital resources. To talk, as some hon. Members opposite do, about having to be financed by the Government, and so on, is completely missing the point. They are talking about financing the capital expenditure and that involves pricing policy, and so on. Their criticisms and what criticisms of the nationalised industries can be made—and we agree with a number of them—are criticisms of that and not of the level of capital expenditure itself, which is an entirely different matter. I repeat that the nationalised industries have certainly not been bleeding the economy white by getting an unfair proportion of capital resources.
Another section of public capital expenditure has certainly not been getting its fair share of expenditure in the last few years and it is to that that I now want to turn. I was very glad that this afternoon the Minister recognised that this talk of public services is not necessarily to imply that these other forms of public expenditure are in the way of welfare or social security, and so on. For example, when we talk of roads there is not an hon. Member opposite who does not want to see a very large expansion in the roads programme, and most of us on this side would agree. In the White Paper that is given as public service capital expenditure, but it is not a welfare payment but something which economically, apart from other reasons, is absolutely indispensable. The same is largely true of education. We are not building more universities, or expanding present universities, or building more technical colleges, or improving the quality of our schools simply as a sort of welfare or social service measure, but because, apart from anything else, they are economically indispensable if the country is to have the sort of prosperity which we should all like it to have.
There are other parts of the public service expenditure which are being very badly treated, and among the many which have been mentioned the worst is housing. It does not require a Scottish Member—at least, it ought not to require a Scottish Member—to impress upon the Government the seriousness of the housing position. We know that this is especially so in Scotland, but that it also applies— and I do not want to take too parochial an outlook—all over the country, particularly to the big cities.
We are not at the moment building a sufficient number of houses to provide anything like a solution of the housing problem within a generation. The Alliance Building Society has recently calculated that we ought to be building 400,000 houses a year for the next 20 years to give us an extra 8 million houses to allow for slum clearance, the natural forces of decay, and so on. Other calculations have also been made, but I have not yet seen a calculation by an authoritative source which has been satisfied with the present rate of house building in this country.
What is more, this is not something which can be left to private enterprise. It ought to be pointed out to hon. Gentlemen opposite that when private enterprise spends money on building houses, the strain or drain on the resources of the economy is the same as when the building is carried out by public authorities. It does not matter whether the houses are built by public or private authorities. There is the same expenditure of money, and the same drain or strain on the country's resources.
It is no answer to say that we must leave this to private enterprise. We know that private enterprise will be unable to solve the housing problem. This is true in England and Wales, and it is demonstrably true in Scotland. Last week we had the Housing (Scotland) Bill which contained a number of complicated financial provisions, which even the Government admitted would not add one house to the number of houses that would be built in Scotland during the next few years. Last Session there was a Housing Bill for England and Wales, but the Government have no policy for increasing the number of houses built by public authorities. As a matter of fact, the whole emphasis in


the policy has been against the building of house.; by public authorities, and, so far as there is to be an increase at all—and none is really projected—it is to be in private house building.
The Government will probably say that this is a question of looking at the resources of the country as a whole and seeing what we can afford. They will probably say that we must not forget that they are putting up hospitals and building schools, and that we must not forget, too, that if we strain the country's resources too much these things will be impossible. This is the general line of the Government's argument.
If one looks at public capital expenditure in isolation, if one does not consider the economy as a whole, and if one considers that public capital expenditure has some sort of natural limit beyond which it must not go, there is a certain amount of substance in the argument; but our argument is that there is no natural limit of that sort, and that if the Government were to plan the resources of this country in an intelligent way the amount of money available for public investment would be considerably increased. This is not an economic question. It is not a question only of economic priorities. It is a question of social priorities.
The Government are unable to solve this problem. They are not able to increase the amount of public investment in housing and do all these other things because their policies are circumscribed by the sort of general principles upon which they have been operating over the last few years. If the Government were to be serious about planning—not just about investment but as regards the whole economy—and if they were serious about taking an active part in the allocation of resources among the varying demands made on it, it would be possible to increase considerably the amount of resources given to public housing. I believe that this, more than anything else, is detracting from the quality of life in this country.
It is as simple as that. Do the Government place the same emphasis and the same importance on housing as we on this side of the House do? If they do not, and if they continue as at present, the housing problem of this

country will never be solved, certainly not within the next generation.

Mr. James Dempsey: I am sure that my hon. Friend will be aware that Scotland, with one-tenth of the United Kingdom population, has over 800,000 houses which are over forty years old, 71,784 single-apartment houses, and 619,521 houses without baths. If he looks at the White Paper he will see that, instead of increasing the amount of capital investment for housing, the Government propose to spend £1 million less next year than in the previous year.

Mr. Millan: I am very well aware of those figures. That is what I have been saying to the Government. It is not a question of the resources not being available; it is a question of the Government not making them available. Unless they give this matter a priority far higher than it has at present, and do so within the context of planning the resources of the whole country, they will not be able to solve our housing problem.
The charge that we make against them is not simply that they have failed in housing, or that public expenditure generally is too low. It is that it is impossible, within the context in which they are operating, to make it any higher, because, as my hon. Friend the Member for Blackburn said, they are afraid of planning, and they have steadfastly set their face against the realistic and effective planning of our resources.

8.41 p.m.

Mr. Francis Pym: We have just heard a most eloquent speech from the hon. Member for Glasgow, Craigton (Mr. Millan). He hailed as a significant event what he described as the Government's conversion to planning. By "planning", hon. Members on this side of the House do not mean quite the same thing as hon. Members opposite mean. In this connection I am reminded of what Humpty Dumpty said:
When I use a word it means just what I choose it to mean—neither more nor less.
However, the hon. Member showed that he had a wider grasp of the problems that we are discussing than did some of his hon. Friends.
The hon. Lady the Member for Blackburn (Mrs. Castle) gave us a very fluent speech, mainly upon the subject of growth. I do not deny that growth is very important. It is true that other countries may at present be growing faster than we are. But a more balanced view is necessary, because growth is not the only object of our policy. There are other things to take into account, and I should have thought that the maintenance of a high level of employment came at the top of the list. The hon. Lady referred so much to France that I am slightly surprised that she did not make her speech in French. She must be fluent in that language.
Many hon. Members have made piecemeal criticisms of this expenditure. Some hon. Members want more money spent on hospitals, others want it spent on housing, or education, or roads, or railways or nationalised industries. Everything has been mentioned. But we cannot deal with this matter on a piecemeal basis. Every item of expenditure, whether investment or not, is related to every other item. It may be easy to put up a case for spending more on this item or that item, but it carries with it an obligation to review and reexamine the position of our accounts.
The right hon. Member for Orkney and Shetland (Mr. Grimond) asked a number of questions which indicated that he was as mystified as many other hon. Members are by the difficulty of deciding the relative advantages and merits of one kind of investment as compared with another—the difficulty of deciding between roads on the one hand and schools on the other. He suggested that an investment board should be set up. I should hesitate to support a Motion which removed an issue of this importance from consideration by this House. A much better suggestion is that which my right hon. Friend the Chancellor proposed, namely, the setting up of a National Economic Development Council, which must take into consideration questions of public investment.
The particular item to which I should like to address my remarks is education. The hon. and learned Member for Kettering (Mr. Mitchison) raised the subject and indicated that he thought that our expenditure on education was

wholly inadequate. He criticised it, with the other criticisms which he made. I do not think that it is any use, nor does it help the debate, to minimise the efforts made in the last ten years. Hundreds of millions of £s have been spent every year on education and total expenditure on it, including investment, has risen from £400 million to over £800 million in that time.
Impressive as these figures are, I do not think that they are quite as impressive as the rise in the proportion of our national resources spent on education today compared with 1951. Expressed as a percentage of the gross national product, the national effort devoted to education has risen from about 3 per cent. to about 4½ per cent., which is a substantial rise—a rise of from 7d. in every £ of the national product to over 10d. in every £. That is a very important rise. No one can say that we have not increased our expenditure and efforts on education.
I am one of those prepared to support a further rise, although this is a field in which there is a long delay between making the investment and reaping the reward—a point made by my hon. Friend the Member for Weston-super-Mare (Mr. Webster) when he discussed the question of getting a return on an investment. When one increases one's investment in education the return is very long delayed. But that is no reason for not making it.
The governing factor should be the supply of teachers, adequately trained and of the required standard; it is not just a question of getting X-thousand of extra people, throwing them into the schools and hoping to get the right result. There must be an adequate supply of trained teachers. This is the bottleneck. It is no use gearing up the whole education system and spending millions more on new schools and other buildings and services if we have not an adequate supply of teachers for them. If we do, the investment will be wasted to the extent that the buildings which have been put up as schools will not be used to the fullest capacity, or, if they are used, we shall have accepted lower standards than those on which we should insist and lower standards than those which will do the job.
There are signs that we shall be able to cope with the problem. I want to


draw attention to paragraph 79 which the hon. and learned Member for Kettering mentioned and which says that the capacity of the training colleges will be increased by 12,000 places by September, 1962, and that all the work of expansion by another 12,000 places will have started by the middle 1960s. He mentioned a figure of 80,000 extra teachers being required to eliminate over-sized classes by 1970 and wondered how we could hit that target with such a paltry programme. In fact, it is not a target but a statement of the number of teachers required.
In the last ten years, without the facilities mentioned in that paragraph, there has been an increase of over 60,000 teachers, so that the plan indicated in the White Paper holds out the hope that we could achieve that target if we decided to go for it. But we must remember that if as a matter of national policy we decide to endeavour to recruit that number of teachers, it would involve switching our resources still more to education, because those teachers would not be available for the other jobs which otherwise they would do.
It is all a question of the competing claims upon our resources. We would do well to endeavour to ensure that for every £ we invest we get the best possible value for money. I wonder whether there is too much specialisation in school buildings. Is it possible that this vast expenditure on new buildings could somehow be adapted to serve a wider community than just the children who are taught in them? If we could use school buildings for other purposes as well and get greater advantage out of them, we should have a more profitable return from our investments.
My constituency is, among other things, famous for its village colleges, which are not in any sense of the phrase comprehensive schools, as some people suggest. They are a kind of community education centre. They serve not only as buildings in which to teach children, but also as excellent centres for part-time classes in adult education and for other purposes. Very often in a Cambridgeshire village a wedding reception will be held in one of these village colleges. They have all sorts of uses. They are essentially valuable in

the country, but they also have a value in a town or indeed in any community.
My next point carries our thinking on education a little further, although it is not directly concerned with money. We should encourage parents to take a greater interest in schools. Nowadays in the Welfare State parents are sometimes apt to think that the schools are so well run and managed that there is no need for them to take part in any activity connected with them or take any interest in them. This is not the true position. I am not suggesting that all schools with parent-teacher associations are necessarily a success, but I believe that when parents take a tremendous part in the life of the school the school is better for it.
I do not believe that it is impossible to visualise circumstances in which small sums of money could be raised in a locality for a school, with the cooperation of the whole community. The school and the service would be better appreciated for it. It would also serve to indicate to people the need for a greater investment in education, because we are here up against a public relations question. It is a question of persuading people that more money spent on education is worth while and that if necessary we must make cut-backs in other directions. Anything which serves to bring home to ordinary people the need for more effort and expenditure on education would help the whole nation.
My right hon. Friend the Chief Secretary suggested that finance committees of local councils might contemplate preparing a list of all the capital projects which were contemplated or which they wanted to put into effect in their areas. As a former member of the Herefordshire County Council and its finance committee, I can only say that I absolutely support this idea, because nothing but good would come from it. Many finance committees and county councils might get a shock if the projects they had in mind were put on one list and brought to their attention. It would bring home to them the amount of money involved in their recommendations.
One of the difficulties of local government at present is that, if members are to get satisfaction and reward out of their


work, the best way of doing it is to recommend spending the ratepayers' money. It is only when the estimates come up for discussion that a contrary view is sometimes expressed. Therefore, I welcome my right hon. Friend's suggestion and hope that councils and finance committees will put the idea into effect.
The Amendment says that the proposed scale is quite inadequate. I think that all the speeches from hon. Members opposite have been directed to recommending increases in expenditure in this, that or the other. But we are competing with all the other demands on our resources. Investment itself in total competes with consumption.
All of us in this country, with our skill, our labour, our machines, our plant and our industry, provide the gross national product, and out of that we have to decide each year how much we shall devote to each project, and in that sense investment is competing with consumption. If we want more investment for all these projects, then it follows that we cannot continue to consume the same amount, and if, therefore, hon. Members opposite are recommending much more investment on all these projects, I think that they ought to support the pay pause and we all ought to agree that we must hold back on consumption as a deliberate matter of policy in order to be able to do this and explain to the people that.
If we want more roads, schools and everything else, we must consume less each year. I think that is what we ought to do, and in that sense I think that the Amendment put down by the Opposition is inconsistent. This White Paper is an admirable document. I welcome the speech made by my right hon. Friend the Chief Secretary to the Treasury and the new thinking and planning, in the sense in which we use that term, that is now going on in the Treasury, and I support the White Paper.

8.56 p.m.

Mr. Michael Stewart: We have been discussing the White Paper on public investment. It is not, of course, a complete account of public investment otherwise it would contain references to those large recipients of public bounty, the steel and aircraft industries. Hon. Members like the hon. Member for Walsall, South (Sir H.

d'Avigdor-Goldsmid) and the hon. Member for Morecambe and Lonsdale (Mr. de Ferranti), who spoke of the publicly-owned industries as if they were passengers carried by the private sector of the economy, should realise two things: firstly, the valuable, essential service rendered to private industry by the publicly-owned industries and, secondly, the large extent to which what is called the private sector of the economy draws on the public purse and leans on public transport.
Even if this were a complete account of public investment we should not discuss it strictly by itself. It can only be intelligently discussed as part of the concept of investment as a whole. We have to think not only of that part of investment which is within the public sector and directly under the Government's hands but of the whole amount of the country's resources that are invested, that is to say, devoted to the future rather than the present, whether through public or private channels. Not until we do that can we make a proper judgment about our public investment programmes. It was the failure of the right hon. Gentleman the Chief Secretary to the Treasury to realise that that made his speech so depressing at the beginning of this debate.
The point was realised very fully and illustrated most strikingly in the speeches of my hon. Friend the Member for Glasgow, Craigton (Mr. Millan) and my hon. Friend the Member for Blackburn (Mrs. Castle), the latter part of whose speech I was sorry to miss. We had also some realisation of this point, that we must consider investment as a whole, in the speech of the right hon. Gentleman the Member for Orkney and Shetland (Mr. Grimond). He suggested some kind of advisory committee on investment. The right hon. Gentleman should be encouraged in this line of thought. If he persists in it, he may end up with a proposal almost as radical as that to be found in the policy which his party put before the country at the General Election of 1929. If he travels a little further on that route, he may realise the necessity for the community to control the commanding heights of the economy.
I say all this because the vital question, the question that really matters,


is not simply how much money is being invested in the public sector but, and this is vital for the country to consider and decide, what is the amount of our total investments through private or public channels, and what proportion does it bear to our total resources?
In considering that question, the country has to require, first of all, that the total of our investments shall be large enough for the growth and health of the community. It is one of the great failures of this White Paper that at no point is that question considered. In paragraph after paragraph there is the dread that, conceivably, we might be investing too much. The Government never consider at all the question of whether we are investing sufficient to provide our economy with the growth it needs.
The first thing, therefore, to consider about investment is whether it is large enough to meet the things that are essential for the growth and health of the community. Then, if there is a danger that it should become too large, we meet it by excluding from our investment programme the items that are least essential. That ought to be the criterion—the more or the less essential. There may be room for some differences of opinion as to what is more essential or less essential, but it is not completely beyond the wit of man to find some answer to that question.
In one sphere, for example, it is more important to use resources to make our machine-tool industry up to date and efficient than it is to use them to provide a greater variety and elegance in the packaging of food. In another field, it is more important that the university graduate—whose education has cost him, the community and his parents a good deal, and who is, in his own person an example of investment—should be engaged in a laboratory, perhaps helping in the conquest of disease, perhaps discovering how to make building labour more effective—than that he should be writing semi-learned advertisements for detergents. In yet another aspect, a dwellinghouse is more important than a summer house, and I commend that to the consideration of those who say that we cannot build more houses for people's need because the building industry is overloaded.
What matters is how essential the investment is. If we look at public and private investment, we find that public investment is composed almost entirely of essential investment. Looking down the list in page 6, or at the larger and more detailed table further on in the White Paper, there is nothing which at first sight one would immediately strike out as trivial, or as not required in the present situation. There might be some argument as to exactly how much of each item was essential, but, in the main, we should accept that public investment is essential investment. On the other hand, private investment is a very mixed bag, varying from the most essential to the most trivial.
That is the real situation, but the Government always talk and act on the assumption that private investment, however essential or however trivial, is always good, and that public investment is something which, at best, should only be tolerated, and that a victory has been won if its volume is cut down.
The real trouble with the Government's approach to this problem is that they are working on a false principle from the start. Instead of discriminating between more and less essential investment, they are discriminating between public and private investment—and they are doing it in the wrong way. The reason for that was let out of the bag by the right hon. Gentleman when opening today's debate. When it was suggested that if there were to be restrictions in the public sector some restrictions of other kinds of investments were desirable, the right hon. Gentleman replied that the public sector was more controllable.
Why is it more controllable? It is because the actions of Governments preceding the present, both Liberal and Labour, and going back for many years, have put these things into the public sector. It is not the law of nature that these things and these only are in the public sector. For a Government to present us with a situation where they are cutting down essential investment because it is in the public sector and doing little or nothing to restrain trivial investment because it is in the private sector, and for them to excuse that on the ground that the public sector is controllable, is an abdication of the function of Government.
They are really saying that that was the easiest thing to do; that it was not the most prudent but the easiest. "We could turn off the tap and we did so because it was the easiest thing to do and we thought no more about the long-term effects on the economy," the Government are saying. That has been the attitude of Conservative Governments during the past ten years. What have been the results of that attitude?
I believe that Britain is actually investing each year about one-sixth of its productive power. I see the Financial Secretary murmuring. Does he wish to correct that estimate, although I believe it to be right?

Sir E. Boyle: I will correct it as I go along.

Mr. Stewart: Other estimates have been given during the debate, one of 15 per cent., but I was being a little more optimistic. In the United States it is about one-fifth, in West Germany about one-quarter, and in the Soviet Union about one-third. I urge hon. Members to consider the whole period from 1951 to 1960. It has been a period for this country of extraordinarily good luck in the terms of trade in that the things we buy have been cheaper and the things we sell dearer. The importance of that in producing our present affluence was stressed by the former Chancellor of the Exchequer, the then Mr. Heathcoat Amory.
Yet despite that good luck we find that during those ten years the percentage increase in production in Britain has been about one-fifth of that of Italy and West Germany and about one-half of that of France and the Netherlands. In the countries of the Common Market—which it is proposed we should enter—one only, Belgium, had a less satisfactory record of production than ourselves during that period. The same record appears if one studies what has been happening to the United Kingdom's share of world exports of manufactured goods. In 1950 of all the manufactured goods exported anywhere in the world one-quarter came from this country. By 1955 it was one-fifth and by 1960 it was one-sixth.
It is this kind of situation which makes it difficult for us to accept the complacent judgment of the hon. Member for More-

cambe and Lonsdale when he commented on the fact that we are, fortunately, a country with one of the highest standards of life in the world. That is true, but the Government know that we cannot afford to rest on these laurels. We must consider what our future power of production can be. We cannot solve that while the Government still treat investment on the basis of discriminating, when they have to discriminate, not against less essential investment but against public investment because it is public. This is why we say that our record of public investment is not adequate to the economic task which, together with the Ministers of the O.E.C.D. countries, we have pledged ourselves.
I turn now from the economic effects of the Government's ill-judged attitude towards investment to the social effects. One of the extraordinary features of this country is the contrast between the ingenuity, charm and elegance with which we can produce certain things and our almost grotesque failure to remove squalor in some of the most important parts of human life. At this time, as Christmas approaches, anyone walking about the lighted streets of the West End of London or the shopping centre of any great city cannot but marvel—and the Government might wish to pat themselves on the back for it—at the skill with which we manage to produce all kinds of agreeable objects and present them to people, encouraging consumption.
Yet we are told that the country which can do all this cannot solve the housing problem, cannot deal with the problem of the homeless and cannot raise the school-leaving age, possibly, for the next 20 years. Incidentally, on that point, if the hon. Member for Cambridgeshire (Mr. Pym) will follow further some of his calculations about the prospective number of teachers he will see the objective of raising the school-leaving age receding farther and farther into the distance. We are told, also, that this country cannot even run its prison service decently. Those are some of the social aspects of the Government's wrong judgment about investment—the persistence of squalor in housing, in health and in education.
There have been several speeches developing the case with regard to health and education. There was, of course,


the opening speech by my hon. and learned Friend the Member for Kettering (Mr. Mitchison), and we have had speeches from my right hon. Friend the Member for Clackmannan and East Stirlingshire (Mr. Woodburn) and my hon. Friends the Members for Glasgow, Maryhill (Mr. Hannan) and for Glasgow, Craigton. I am bound to say, Mr. Deputy-Speaker, that in this debate Scottish Members seem to have used up rather more than their traditional eleven-eightieths of the time which we have spent debating the subject. I trust that that will be remembered for righteousness on account of English Members in future debates.

Mr. Grimond: I have always regarded the hon. Gentleman as at least an honorary Scot, or one by upbringing and tradition. I hope that he is not deserting us.

Mr. Stewart: I am a Scot by descent, but, I must admit, am now a Londoner by adoption and affection.
I am delighted to see the right hon. Member for Orkney and Shetland in his place. I was making some comments on his cautious approach towards the policies which his party advocated in regard to investment in 1929.

Mr. Grimond: We were then well ahead of the Labour Party.

Mr. Stewart: I think not. Perhaps the right hon. Gentleman will study what I said on that matter, too.
In social matters, I shall concentrate on housing. We have debated housing several times recently, but it is part of the tragedy of the subject that there is not the least difficulty in finding, on every occasion we debate it, fresh facts and figures which demonstrate the inadequacy of the Government's housing policy, and in this debate the particular aspect of that policy we are discussing is, of course, the amount of capital used in building houses for public authorities, that is to say, local authorities, new towns and certain lesser public channels for providing housing.
That inadequacy strikes one's eye as soon as one looks at page 6 of the White Paper. In the public service capital expenditure section, one item, and only one, has gone down, and that

is housing. Surely, any intelligent person, who, possibly, has not discussed financial matters before but who knew what life in the country was like and who came to this subject, would be astounded at the indication in this table that housing is now at such a stage that we can allow our investment in the provision of houses by local authorities to fall—and it has fallen.
In 1960, 103,000 dwellings were provided by public authorities in England and Wales. For the reason I have mentioned, my hon. Friends will, perhaps, excuse me if I concentrate for the moment on English and Welsh needs. That figure of 103,000 was a little more than half what it was in 1954. It has gone down indeed.
Let us see to what purpose those 103,000 dwellings have been devoted. Sixty thousand of them were for replacement of slums, 15,000 were for other replacements where dwellings had to be swept away for roads or other public purposes and 27,000 were one-bedroom dwellings intended for, although not invariably occupied by, elderly people. We are all glad to see this provision for elderly people, but when we have taken that 60,000 to replace the slums, the 15,000 to replace dwellings otherwise demolished and the 27,000 simply one-bedroom homes, how many dwellings with more than one bedroom in them are left to meet the needs of people on the general waiting lists of local authorities? The answer is 1,000.
We shall be told that that is only the public sector investment and that private enterprise will do the job. One hundred and sixty-two thousand dwellings were provided by private enterprise, and 2,000 of them were to let. That gives a total of dwellings to let with more than one bedroom each to meet the needs, not of people coming out of clearance areas, but of people on the general waiting lists of local authorities of 3,000.
How many people are there on the local authority waiting lists, how many households not living in slum areas, not able, grim as it sounds, to hope for rehousing for that reason, and requiring dwellings with more than one bedroom in them? Is the number of such families a quarter of a million, 300,000, or the 500,000 to which the Minister referred


in his recent speech? How many homeless are there? We have discussed this before and we shall discuss it again. We are told that the problem of the homeless should be taken out of politics. We know that phrase. When we are told that something should be taken out of politics, what the person who says it usually means is that we must not say anything with which a Conservative might disagree.
I say it in the reverse sense. Let us take it out of politics. Will the party opposite drop the idea that the building of houses by public authorities is something to be discouraged? It is an idea that no impartial person can maintain in view of the present situation on the waiting lists and among the homeless. Yet we find the Government issuing Circular 37 of 1961 telling us that the local authorities ought to reduce next year the number of starts of houses compared with what they managed to do this year.
What is the reason advanced for that? The Chief Secretary to the Treasury gave it when he said that we must not overload the building industry. This is the point at which the Government must try to grasp what I was saying at the beginning of my speech, and which so many of my hon. Friends have said during this debate—that we cannot treat the public sector of investment as completely isolated from the rest. The reason why we are at present having to say to the local authorities, "Do not build more because the industry is overloaded," is partly because certain types of private building is doing the overloading.
Between 1954 and 1960, what happened? Using 1954 monetary values on both occasions, investment in public authority housing fell from £421 million to £243 million—£178 million down—and during that time what is called miscellaneous building by private developers—not industrial—went up from £95 million to £217 million £122 million up. I dare say that some of that miscellaneous development was useful, necessary and desirable, but nobody on earth could pretend that all of it was anything like as essential as the provision of council houses would be at the present time.
The need for more public investment in housing is the more important today because we are having it driven in on us all the time that private landlordism, except it be landlordism for those tenants who are quite well off, is completely falling down on the job. In the nineteenth century this country had to wake up to the fact that we could not leave education to private, either profit-making or charitable, enterprise alone, and we are now having to wake up to the fact that private landlordism is similarly, indeed even more, inadequate.
There have been two interesting surveys recently, the Rowntree Survey and one by Mr. J. B. Cullingworth, some of the results of which appeared in the Guardian in March. I am referring to the inadequacy of private landlordism properly to look after its property, though heaven knows enough bribes have been offered to them to do it, and the biggest of the lot was the 1957 Rent Act, which was to make it possible for them to make many properties available for letting at reasonable rents and to keep them in proper repair. The Rowntree Survey tells us that far more repairs have been done since 1957 by tenants in their own time, with their own labour and at their own expense than were ever done by private landlords. Let anyone go down any working-class or middle-class street in this country and ask the tenants, and he will see where the raw material for a survey of that kind comes from.
In the last two years quite generous improvement grants have been offered both to owner-occupiers and private landlords. What proportion of them has been taken up by private landlords? Less than one-fifth, and there are not five times as many owner-occupiers as there are private landlords in the country. We can sympathise with some of the private landlords. In one sample survey, it appeared that four out of every twelve were over 70 years of age and that seven out of every twelve were over 60 years of age. A considerable number of them inherited their property, and many of them would be quite happy to get rid of their property if they could only get anything like an equivalent income from anywhere else. In fact, to so many landlords, their property is just an income and nothing else.
In the old-fashioned parts of London, and I expect in some other towns, we find roads which have such names as "Perkin's Rents", a typical description of private landlordism, to which that property and all the people living in it represented rents, and that is all. That is the situation we are faced with, and that is why we say that this is not the time to cut down and, even beyond the limits of the White Paper, still further to restrict public investment in housing.
We shall be told—and the hon. Member for Cambridgeshire took up the point—"if you say that there should be more public investment, where is it to come from?" I draw the hon. Member's attention to two points. The first, which I have already made, is that if it is felt that the total investment programme cannot exceed a certain figure, what must be excluded from it is what is believed to be the least essential investment. We should not start by saying that private investment can go through the gate and then cut off some of the public investment.
We must look at investment as a whole. The Government must grasp this idea and exercise a degree of control over investment as a whole, public and private, which it does not exercise at present. Next, the Government must consider special encouragements, or financial inducements, by reduction of taxation, to stimulate investment in those industries which are most vital to the industrial and exporting strength of the country.
Another error into which the hon. Member for Cambridgeshire was liable to fall was that of supposing that national income is a permanently fixed figure. The point is that it is or can be a growing figure, and if in one year we are prepared to be bold about essential investment our task of finding money for further investment will be that much easier in subsequent years because our total wealth will be growing.
If it is said that to grant such special inducements would create a financial or budgetary problem for the Chancellor, then he must look at certain other things in the tax field. He must look at places where he could get money which could be used in this fashion. He could look seriously at the problem of tax avoidance and could adopt one of the many expedients suggested to him for dealing

with the undoubted abuse of business expenses. At long last something should emerge in the form of a workable capital gains tax from this Government.
We gather that the Chancellor is moving in that direction. He told the public in a speech a little while ago that he received a great deal of abuse but no constructive ideas. It is not that he has not received constructive ideas. It is that they take such a long time to percolate. It is many years since we began to tell him that some form of capital gains tax would be a good thing. We now gather that he is slowly, slowly, moving in that direction.
Another thing which the Government must do is to drop some of their political prejudices and take pride in the nationalised industries. When we put forward a proposal for the public ownership of certain types of land in the last Session, the Chief Secretary to the Treasury, then Minister of Housing and Local Government, disposed of the argument, or thought that he had disposed of it, by saying, as if it were an axiom, that nationalisation was a flop. I wonder whether the right hon. Gentleman attended our recent debate on aviation. Nobody could have gone away from that debate with that impression if he had paid any attention to the facts.
If any of the nationalised industries is not doing too well, who has been in charge for the last ten years? The hon. Member for Morecambe and Lonsdale pointed out that the buying policy of the nationalised industries can be used as a good instrument of Government policy to promote efficiency in the private sector. But we cannot do that unless there are some publicly owned industries with which to do it.
The Government must realise, therefore, that these publicly-owned industries, which even in their wilder moments they do not propose to sell off to private enterprise, ought to be used as part of their investment policy. In general, they must put before themselves in our present situation something like this kind of criterion, and if they find the results coming out like this they will know they are moving in the right direction—

Mr. de Ferranti: The point is that if these industries were still owned by private enterprise there would be no


need for them to be encouraged to do the sensible thing.

Mr. Stewart: No, Sir. I see the hon. Member smiling. He cannot really expect me to take that seriously. He knows perfectly well that in 1945 there was absolutely no choice but to take over the coal and railway industries, and that the others have been found, on the narrowest commercial standards, most successful and important parts of our economy. I do not think he expects me to bother with his intervention.
If the Government want to know whether they are moving in the right direction, let them look for these signs: more houses provided by public authorities, and, if necessary, to that end, less luxury building of all kinds; more expenditure on research and less on advertising; more on essential industry and the re-equipping of essential industry, and less on trivial consumption.
Several hon. Members have talked with horror of regimentation, of holding back consumption, of the dangers of dictatorship. The Chief Secretary to the Treasury implied that in this country we did not compel people to hold back from investment or from consumption. When the Government tell the teachers that they must have £5 million less than the Burnham Committee agreed, what are they doing but telling them to refrain from consumption? When they tell a sick man who is just well enough off not to be drawing National Assistance that he must pay another 1s. for every item on the prescription, what are they telling him but that he must refrain from consumption on other things? When they tell the Surtax payer that in 12 months' time he will not have so much tax to pay, what are they doing but increasing his consumption?
We are glad to see the Chancellor of the Exchequer here. I realise that he could not be here earlier. I understand that he has been having important discussions with the trade unions. Perhaps he has been discussing with them the importance of holding back consumption.
The Government do practise a policy of restraint, regimentation, holding back. The trouble is that they practise it in the wrong way on the wrong sort

of people and for the wrong purpose. They practise it particularly at the expense of those who have so strong a sense of dedication that they shrink from even the contemplation of the strike weapon, at the expense of the old who cannot work and cannot use that weapon, at the expense of the sick on whom the main economies in the Health Service bear most harshly, and at the expense of the children, to whom the greatest permanent injury is done by the squalor in large parts of the housing and education services. For what purpose is all this done—solely for the purpose of enabling the Government to stagger along to the next crisis.
I say quite definitely that although I think much can be done greatly to increase the powers of growth in our economy that will give us one source from which more useful public investment can come, we may nevertheless have to practise some degree of restraint, of holding back, of not seeing consumption rise as high as it otherwise would. I think that a renowned and powerful nation like ours is prepared to accept that, to accept the need for self-discipline and restraint if it is done with justice and with purpose. What we are faced with at the present time, is a policy of niggling restraint without justice, without purpose and without dignity.

9.35 p.m.

The Financial Secretary to the Treasury (Sir Edward Boyle): The very real pleasure I feel at following the hon. Member for Fulham (Mr. M. Stewart) for the first time after an interval of rather more than two years is only very slightly lessened by the reflection that I have often felt some small doubt as to whether the majority of hon. Members would find themselves altogether happy in his Utopia.
I want to begin by replying to a number of the points he made at the start of his speech on the subject of investment. He said, first, that he thought that we were not investing a sufficient proportion of the national income. From that point of view, the trend of the last two or three years has been decidedly encouraging, however. If one looks at the gross figures, we were, in 1960—the last year for which figures are available—investing £4,100 million.


The proportion of the gross national product invested rose from between 15 per cent. and 16 per cent. in 1951 to between 17 per cent. and 18 per cent. in 1959, and to rather more than 18 per cent. in 1960.
I can assure the House that the figure for 1961 will be considerably higher again, rather more than 19 per cent. It is quite certain that the largest rate of increase in capital investment during 1960 and 1961 will be in manufacturing industries—that is to say the sort which is most effective in promoting competitive power abroad.
The hon. Gentleman went on to say, as I expected, that the Government should discriminate more between what is essential and what is not essential in investment. We have debated this matter again and again and tonight I say only two things about it. First, I cannot help wondering how far, in practice, hon. Members opposite, if they were in power, would defy market forces when it came to capital investment. Would they be prepared to go against the trend which would make itself felt through the ordinary workings of the market?
The second point concerns one particular reason why I often suspect whether it would be wise for the hon. Member or anybody else to exercise too much dictatorial power over planning and investment. There are many arguments raised here. One which is often used, and which is very true, is that planners often tend too much to assume that present trends will continue unaltered—as economists say, they tend far too much to extrapolate from the present situation.
I was glad to hear that the hon. Gentleman, in discussing inessential development, mentioned packaging. But, from the point of view of the export trade, surely, packaging skill may be very important. If one looks at the experience of the control of investment under the Labour Government, and planning by a great many bodies, one always finds too much tendency to discriminate in favour of productive investment as against commerce.
Yet I believe that it is just as important to increase our efficiency in commerce as in any other part of our economy. I hope that the party opposite will never forget what seems to me to be crucial—that a

successful balance of payments is not just a matter of improving our competitive efficiency when it comes to the export trade, but is also a matter of achieving as efficient a performance as possible over the whole range of our national economic activities.

Mr. Denis Howell: When are the Government going to start doing it?

Sir E. Boyle: The figures I gave show that we have made considerable progress in this already.
This debate has served one very useful purpose. The speech of my right hon. Friend the Chief Secretary to the Treasury showed how utterly false is the charge that the present Government have neglected the public services. This charge is conclusively refuted, whether one considers the rise in social service expenditure since 1951, the rise in public investment, or, thirdly, the projected future rise in public investment as revealed in the White Paper we are discussing.
Social service expenditure in 1960 was 48 per cent. higher in real terms than in 1951, and 19½ per cent of our total national income was spent on the social services in 1960, as compared with 17½ per cent. nine years ago. Secondly the current public investment programme, as my right hon. Friend pointed out, is 40 per cent. larger in real terms than the public investment programme of nine years ago.
What is more—and this is the answer to the hon. Member for Fulham's point about discriminating against the public sector—public investment is going ahead at the present time at a rate substantially faster than the gross national product. The Government are planning for an increase of 5 per cent. in public investment next year, which will mean an increase of fully £200 million in two years—from £1,640 million, the estimated out-turn for the financial year 1960–61, to £1,840 million, the level of expenditure already approved for the financial year 1962–63. Indeed, for the reasons which my right hon. Friend explained, the total for the financial year will be nearer £1,850 million. It is not only the total which is rising. With the one exception of housing, to which I shall refer in a moment, expenditure on


every item in the public service group will be higher this year and next year than it was last year.
I have laid some stress on these figures because they expose the utter falsity of the phrase, "private affluence and public squalor", which hon. Members opposite have borrowed from across the Atlantic. This is the familiar phrase from Professor Galbraith's well known book, "The Affluent Society", but it is not at all a fair description of our own economy. The picture of Great Britain which is so often portrayed by hon. Members opposite, a picture of a Britain sunk in materialist complacency, neglecting the most urgent tasks of social reform and wealth creation, is simply not borne out by the available figures.
For instance, it is just not true to say that personal consumption has been rising at the expense of other more important forms of economic activity. We can all take pleasure in the general rise in living standards in the 1950s, and the fact that countless ordinary families have now been freed from many of the cramping limitations of a narrow and confined existence. If hon. Members opposite do not believe this, let them look at the Fabian pamphlet which first published the figures and which showed a 20 per cent. rise in living standards during the decade.

Mr. James Callaghan: What about housing?

Sir E. Boyle: I am coming to housing.
Consumer spending as a proportion of the national income has not been rising during recent years. To use one of Mr. Aneurin Bevan's favourite phrases, we have not been " eating up the seed corn ". While I agree with hon. Members opposite that the terms of trade have been favourable to us, the amount of foreign aid which we have been giving has been increasing very rapidly, by 150 per cent. during the last three years.
Public investment and private investment as a proportion of the national income were both higher in 1960 than in 1959 and 1958. On the other hand, consumer spending as a proportion of the national income was slightly lower in 1960 than in each of the two preceding years. What is more, as my right hon. and learned Friend the Chancellor of

the Exchequer explained last July, and as the figures in the White Paper on Public Investment make perfectly clear, the measures of 25th July were deliberately designed to correct the imbalance in our economy by making the largest impact on current consumer spending rather than capital progress.
I want to come to the Opposition Amendment and to the various specific points which it makes, but I must first make a short general comment on the speech of the hon. and learned Member for Kettering (Mr. Mitchison). He said that it was a negative approach to say that we should not invest more than we could afford. That rather reminded me of a speech which I once heard made by a Swede at O.E.E.C. when he said that instead of "piling up claims", by which he meant earning a surplus on balance of payments, his country had concentrated on raising the standard of living at home. It may be that after the First World War some war-time creditors took too much credit for being creditors. With that I am prepared to agree. But I cannot agree with and I totally reject the absurd idea that there is something moral in being a debtor and something moral about increasing one's capital expenditure at such a rate as to worsen one's balance of payments, because, after all, no one in the rest of the world owes us a living.
My right hon. Friend the Chief Secretary dealt fully with the subject of housing. I should have thought that it was generally agreed that the significant indicators were the figures for houses completed and those under construction. The facts are that during the first nine months of 1961 the number of local authority houses completed in England and Wales fell significantly below the rate for 1960, with the result that in both the second and third quarters the number of houses under construction was appreciably higher than a year earlier.
In those circumstances, it was surely only sensible to slow down the rate of new starts in order to hurry up completion of the larger number of new houses already under construction. There is no sense in encouraging local authorities to put out more and more houses to contract if the only result is a slower rate of completion. As a result of the Government's measures, there is every hope


that we shall get better value for the money spent.
A lot has been said today about offices. When one looks at the figures, it is a fallacy to suppose that a cut in office building would result in houses being completed more rapidly. In any case—and this is what I think hon. Gentlemen opposite forget—if we look at the achievements of our trade competitors in the world, they too are building offices. One cannot have an efficient and dynamic economy and a thrustful export trade without a rising level of office building, and more nonsense is talked about this than about any other subject.
I come now to health, and here I should like to draw the attention of the House to the figures on pages 27 and 28 of the White Paper. Capital expenditure on the hospital services, if one adds together the figure for England, Wales and Scotland, is planned to rise from £30·3 million for the financial year 1960–61, to £43·4 million for the financial year 1962–63, and the corresponding figures for local authority health and welfare services are £13·4 million and £22·2 million.
Hon. Members may have noticed, in particular, a rapid increase in the expenditure on the Mental Health Services. What is more, we have embarked on a long-term hospital programme involving a considerable increase in annual investment expenditure. One has to remember that the expansion of a hospital programme cannot be carried out with dramatic suddenness, and I believe that a steady build up of the kind I have indicated is much the most likely to give us the best value for money.
The hon. and learned Member for Kettering mentioned the amount of health expenditure being paid by the Exchequer and the amount coming out of contributions. I hope he will remember that during the current financial year £148 million will come from the National Health Service contributions, and no less than £600 million from the pockets of the taxpayer, and I absolutely disagree with anyone who suggests that the progressive direct taxpayer is not paying his full share of the social services today.
The Opposition Amendment refers, thirdly, to education. Here I must say that I think that a number of visitors to this country from abroad would be surprised at the idea that we have devoted an inadequate share of our resources to investment in school buildings and technical colleges. We have certainly been far more successful than some other Western countries in providing a school place for every child. While I agree with those, like one of my hon. Friends, who say that school buildings are not every thing, it is none the less true that our programme of school building is already bringing about some real improvement in our system of national education.
One very good example is what is known as rural reorganization—the provision of full secondary education in county secondary schools for all children educated in country districts—and over three-quarters of the elimination of all-age schools will have been completed by the financial year 1962–63, which will make a difference to an enormous number of children, not least children in old denominational schools, sometimes in the North of England.
For the last five years we have been regularly spending well over £100 million annually on education investment, and this year we expect the total to rise above £150 million for the first time. One reason is that the capital expenditure of the University Grants Committee is going ahead fast. I do not want to sound complacent, but I have always believed—and I still do—that our record of new school building has been one of our finest national achievements since the war.
The hon. and learned Member for Kettering asked about teacher training. Let us remember the figures here. The first expansion programme, of an extra 12,000 places, is now nearing completion and should be completed, for the most part, in 1962. After 1962 there will be a continuing programme of another 12,000 places. When that programme has been completed we shall have doubled the capacity of our teacher-training colleges. I have never heard anyone suggest that we should have embarked on a larger expansion of teacher-training colleges than that on which we have embarked during the last few years.

Mr. M. Stewart: The hon. Member could at least do me the justice of saying


that many of my hon. Friends suggested that the Government should do this about three years earlier and were told that there was absolutely no need.

Sir E. Boyle: I give the hon. Member full credit for the speeches that he made on this subject in 1957. I do not believe that he received a flat negative. I recall the speeches made after I became Parliamentary Secretary, and I do not remember that he or anyone else suggested that the rate of expansion we proposed for the years after 1959 should have been larger.
I now come to the last part of the Opposition Amendment, referring to
the achievement of the necessary economic expansion of Great Britain.
A considerable part of our public investment programme is directly relevant to this aim. The importance to economic growth of the road programme, or of investment in the power industries, is obvious. If hon. Members will turn to page 13 of the White Paper they will see that the level of investment in the electricity industry will rise by more than one-sixth—from an annual rate of under £300 million to a rate of over £350 million—between the years 1960–61 and 1962–63.
I was a little puzzled by the doctrine of nationalisation of the hon. Member for Fulham. He seemed to suggest that if a nationalised industry did well it proved the merits of nationalisation, whereas if it did badly it proved the demerits of the Government. As my right hon. Friend said earlier, there is a whole range of public investment which makes a contribution to economic growth and efficiency. But there is yet another sense in which the level of public investment is relevant to the objective of economic expansion, and this leads me to my last point.
We cannot deal with public investment in isolation from the other aspects of our economic policy. In the first place, the level of public investment must be planned with an eye to keeping a balance between the total economic resources we have at our disposal and the demands made on them. If we allow the growth of total demand to outstrip our resources—as my hon. Friend the Member for Walsall, South (Sir H. d'Avigdor-Goldsmid) and my hon. Friend the Member for Weston-super-Mare (Mr. Webster)

rightly pointed out—wage costs cannot help rising, and our balance of payments is bound to suffer. It is the Government's firm intention to keep home demand in check until our balance of payments is once more secure, and the Government's policy towards all forms of public expenditure, including public investment, must be shaped by this over-riding aim.
Secondly, we must never lose sight of the fact that if the public sector is allowed to absorb too high a proportion of our economic resources, both our rate of expansion and our export performance are bound to suffer. The reason is that we must leave room in our economy for that high rate of capital expenditure by private industry on which the efficiency of Britain's economic performance so largely depends.
Today, public investment accounts for about 40 per cent. of the total fixed investment in Britain. Expenditure on private housing accounts for a further 12 per cent., and the remaining figure of a little under 50 per cent. is divided almost equally between investment by manufacturing industry and investment by the distributive and service trades. This other private investment—especially capital investment by manufacturing industry—is highly important for the development of our economy.
The modernisation of plant and the exploitation of new inventions—in other words, the sort of risk-taking activities which only the private sector can properly undertake—are just as essential to our rate of expansion and to our export trade as the level of capital investment in roads or electricity, and we must leave adequate capacity in our construction industries and in the other industries producing capital goods free for the demands likely to be made on it by the private sector. That is my answer to the hon. Member for Glasgow, Craigton (Mr. Millan), who I thought made a very thoughtful and interesting speech. If we allow public investment to use up too great a share of our resources, to the detriment of exports or of other forms of investment, we shall then have defeated the very end which public investment is designed to promote namely the development of a healthy and growing economy. All this means that there must be a limit to the total of public investment and that we have to work within some scheme of priorities.
I believe that we have got these priorities about right at present, and I will explain why. It is clearly right in our existing situation to give priority to those forms of public investment which will do most to encourage growth and to improve our economic performance. But we have managed to achieve this priority while at the same time planning for a large expansion over almost the whole field of social investment as well. Indeed, I cannot imagine how anyone could read the table on page 10 of the White Paper and still feel, after reading the table and those figures, that the terms of the Amendment are justified.
The White Paper is closely bound up with the sort of society which we want to see and the sort of economic performance which we want this nation to have. We on this side of the House fully recognise the importance of a high rate of public service investment if we are to raise the standards of living for those who are least well-off in our society and to achieve a widening of opportunity for very many ordinary families.

In answer to the right hon. Member for Orkney and Shetland (Mr. Grimond), I think that the difficulty about his proposal is that decisions within public investment must ultimately be political decisions; they must finally be taken by the Government of the day collectively.

But do not let us forget that rising living standards must always depend on our ability to earn our living in world markets. Surely we should all agree that an increase in our competitive performance and a permanent improvement in the balance of payments must rank highest of all among our national objectives at the present time, and it is this condition which must guide the Government in their choice of priorities. It is because I believe that the Government's choice of priorities as revealed in the White Paper is so clearly right in view of our pressing national need that I confidently invite the House to reject the Opposition Amendment.

Question put, That those words be there added:—

The House divided: Ayes 197, Noes 261.

Division No. 15.]
AYES
[9.59 p.m.


Abse, Leo
Ede, Rt. Hon. C.
Hughes, Emrys (S. Ayrshire)


Ainsley, William
Edelman, Maurice
Hughes, Hector (Aberdeen, N.)


Albu, Austen
Edwards, Rt. Hon. Ness (Caerphilly)
Hunter, A. E.


Allaun, Frank (Salford, E.)
Edwards, Robert (Bilston)
Hynd, H. (Accrington)


Allen, Scholefield (Crowe)
Edwards, Walter (Stepney)
Hynd, John (Attercliffe)


Awbery, Stan
Evans, Albert
Irving, Sydney (Dartford)


Baxter, William (Stirlingshire, W.)
Fernyhough, E.
Jay, Rt. Hon. Douglas


Bellenger, Rt. Hon. F. J.
Finch, Harold
Jeger, George


Bence, Cyril
Fitch, Alan
Johnson, Carol (Lewisham, S.)


Bennett, J. (Glasgow, Bridgeton)
Forman, J. C.
Jones, Rt. Hn, A. Creech(Wakefield)


Benson, Sir George
Fraser, Thomas (Hamilton)
Jones, Dan (Burnley)


Blackburn, F.
Galpern, Sir Myer
Jones, Jack (Rotherham)


Boardman, H.
George, Lady Megan Lloyd (Crmrthn)
Jones, J. Idwal (Wrexham)


Bowden, Herbert W. (Leics, S.W.)
Ginsburg, David
Jones, T. W. (Merioneth)


Bowen, Roderic (Cardigan)
Gooch, E. G.
Kenyon, Clifford


Bowles, Frank
Gordon Walker, Rt. Hon. P. C.
Key, Rt. Hon. C. W.


Boyden, James
Gourlay, Harry
King, Dr. Horace



Greenwood, Anthony
Lawson, George


Braddock, Mrs. E. M.
Grey, Charles
Lee, Frederick (Newton)


Brockway, A. Fenner
Griffiths, David (Rother Valley)
Lee, Miss Jennie (Cannock)


Brown, Rt. Hon. George (Belper)
Griffiths, Rt. Hon. James (Llanelly)
Lever, Harold (Cheetham)


Butler, Herbert (Hackney, C.)
Griffiths, W. (Exchange)
Lewis, Arthur (West Ham, N.)


Butler, Mrs. Joyce (Wood Green)
Grimond, J.
Logan, David


Callaghan, James
Gunter, Ray
Loughlin, Charles


Castle, Mrs. Barbara
Hale, Leslie (Oldham, W.)
Mabon, Dr. J. Dickson


Chetwynd, George
Hall, Rt. Hn. Glenvil (Colne Valley)
MacColl, James


Cliffe, Michael
Hamilton, William (West Fife)
McKay, John (Wallsend)


Collick, Percy
Hannan, William
Mackie, John (Enfield, East)


Craddock, George (Bradford, S.)
Hart, Mrs. Judith
McLeavy, Frank


Crosland, Anthony
Hayman, F. H.
MacPherson, Malcolm (Stirling)


Cullen, Mrs. Alice
Henderson, Rt. Hn. Arthur (RwlyRegis)
Mahon, Simon


Davies, G. Elfed (Rhondda, E.)
Herbison, Miss Margaret
Mallalieu, E. L. (Brigg)


Davies, Harold (Leek)
Hewitson, Capt. M.
Manuel, A. C.


Davies, Ifor (Gower)
Hill, J. (Midlothian)
Mapp, Charles


Davies, S. O. (Merthyr)
Hilton, A. V.
Marsh, Richard


Deer, George
Holman, Percy
Mason, Roy


Delargy, Hugh
Houghton, Douglas
Mellish, R. J.


Dempsey, James
Howell, Denis (Small Heath)
Mendelson, J. J.


Diamond, John
Hoy, James H.
Millan, Bruce




Milne, Edward J.
Reid, William
Taylor, John (West Lothian)


Mitchison, G. R.
Reynolds, G. W.
Thomas, Iorwerth (Rhondda, W.)


Monslow, Walter
Rhodes, H.
Thompson, Dr. Alan (Dunfermline)


Moody, A. S.
Roberts, Albert (Normanton)
Thornton, Ernest


Morris, John
Roberts, Goronwy (Caernarvon)
Thorpe, Jeremy


Mort, D. L.
Robertson, John (Paisley)
Timmons, John


Moyle, Arthur
Robinson, Kenneth (St. Pancras, N.)
Wade, Donald


Mulley, Frederick
Rogers, G. H. R. (Kensington, N.)
Wainwright, Edwin


Neal, Harold
Ross, William
Warbey, William


Noel-Baker, Francis (Swindon)
Short, Edward
Watkins, Tudor


Noel-Baker, Rt. Hn. Philip (Derby, S.)
Silverman, Sydney (Nelson)
Weitzman, David


Oram, A. E.
Skeffington, Arthur
Whitlock, William


Owen, Will
Slater, Mrs. Harriet (Stoke, N.)
Wigg, George


Padley, W. E.
Slater, Joseph (Sedgefield)
Wilcock, Group Capt. C. A. B.


Panned, Charles (Leeds, W.)
Small, William
Wilkins, W. A.


Pargiter, G. A.
Smith, Ellis (Stoke, S.)
Willey, Frederick


Paton, John
Snow, Julian
Williams, D. J. (Neath)


Pavitt, Laurence
Sorensen, R. W.
Williams, LI. (Abertillery)


Pearson, Arthur (Pontypridd)
Soskice, Rt. Hon. Sir Frank
Williams, W. R. (Openshaw)


Peart, Frederick
Spriggs, Leslie
Willis, E. G. (Edinburgh, E.)


Pentland, Norman
Steele, Thomas
Wilson, Rt. Hon. Harold (Huyton)


Plummer, Sir Leslie
Stewart, Michael (Fulham)
Winterbottom, R. E.


Popplewell, Ernest
Stonehouse, John
Woodburn, Rt. Hon. A.


Price, J. T. (Westhoughton)
Stones, William
Woof, Robert


Pursey, Cmdr. Harry
Strachey, Rt. Hon. John
Yates, Victor (Ladywood)


Randall, Harry
Stross, Dr. Barnett(Stoke-on-Trent, C.)



Rankin, John
Swingler, Stephen
TELLERS FOR THE AYES


Redhead, E. C.
Symonds, J. B.
Mr. Charles A. Howell an




Mr. McCann




NOES


Agnew, Sir Peter
d'Avigdor-Goldsmid, Sir Henry
Hopkins, Alan


Aitken, W. T.
de Ferranti, Basil
Hornby, R. P.


Allason, James
Digby, Simon Wingfield
Hornsby-Smith, Rt. Hon. Patricia


Arbuthnot, John
Donaldson, Cmdr. C. E. M.
Howard, Hon. G. R. (St. Ives)


Ashton, Sir Hubert
Doughty, Charles
Howard, John (Southampton, Test)


Atkins, Humphrey
Drayson, G. B.
Hughes Hallett, Vice-Admiral John


Balniel, Lord
du Cann, Edward
Hughes-Young, Michael


Barber, Anthony
Duncan, Sir James
Hurd, Sir Anthony


Barlow, Sir John
Eccles, Rt. Hon. Sir David
Hutchison, Michael Clark


Batsford, Brian
Eden, John
Iremonger, T. L.


Beamish, Col. Sir Tufton
Elliot, Capt. Walter (Carshalton)
Irvine, Bryant Godman (Rye)


Bennett, F. M. (Torquay)
Elliott, R.W.(Newestle-upon-Tyne, N.)
James, David


Berkeley, Humphry
Emery, Peter
Jenkins, Robert (Dulwich)


Biffen, John
Emmet, Hon. Mrs. Evelyn
Johnson, Dr. Donald (Carlisle)


Biggs-Davison, John
Errington, Sir Eric
Johnson, Eric (Blackley)


Birch, Rt. Hon. Nigel
Fisher, Nigel
Jones, Rt. Hn. Aubrey (Hall Green)


Bishop, F. P.
Fraser, Hn. Hugh (Stafford &amp; Stone)
Kaberry, Sir Donald


Bossom, Clive
Fraser, Ian (Plymouth, Sutton)
Kerans, Cdr. J. S.



Freeth, Denzil
Kershaw, Anthony


Bourne-Arton, A.
George, J. C. (Pollok)
Kimball, Marcus


Box, Donald
Gibson-Watt, David
Kitson, Timothy


Boyle, Sir Edward
Gilmour, Sir John
Leather, E. H. C.


Braine, Bernard
Glover, Sir Douglas
Leburn, Gilmour


Brewis, John
Glyn, Dr. Alan (Clapham)
Legge-Bourke, Sir Harry


Bromley-Davenport, Lt.-Col. SirWalter
Glyn, Sir Richard (Dorset, N.)
Lewis, Kenneth (Rutland)


Brooke, Rt. Hon. Henry
Goodhart, Philip
Lilley, F. J. P.


Brooman-white, R.
Goodhew, Victor
Lindsay, Martin


Brown, Alan (Tottenham)
Gough, Frederick
Linstead, Sir Hugh


Browne, Percy (Torrington)
Gower, Raymond
Litchfield, Capt. John


Bryan, Paul
Grant, Rt. Hon. William
Lloyd, Rt. Hn. Geoffrey (Sut'nC'dfield)


Buck, Antony
Grant-Ferris, Wg. Cdr. R.
Lloyd, Rt. Hon. Selwyn (Wirral)


Bullard, Denys
Green, Alan
Longbottom, Charles


Bullus, Wing Commander Eric
Grimston, Sir Robert
Loveys, Walter H.


Butcher, Sir Herbert
Grosvenor, Lt.-Col. R. G.
Low, Rt. Hon. Sir Toby


Campbell, Gordon (Moray &amp; Nairn)
Gurden, Harold
Lucas-Tooth, Sir Hugh


Carr, Robert (Mitcham)
Hall, John (Wycombe)
MacArthur, Ian


Chataway, Christopher
Hamilton, Michael (Wellingborough)
McLaren, Martin


Clark, Henry (Antrim, N.)
Harris, Reader (Heston)
McLaughlin, Mrs. Patricia


Clarke, Brig. Terence (Portsmth, W.)
Harvey, John (Walthamstow, E.)
Macleod, Rt. Hn. Iain (Enfield, W.)


Cleaver, Leonard
Harvie Anderson, Miss
MacLeod, John (Ross &amp; Cromarty)


Cole, Norman
Hastings, Stephen
McMaster, Stanley R.


Cooke, Robert
Heald, Rt. Hon. Sir Lionel
Macmillan, Rt. Hn. Harold (Bromley)


Cooper, A. E.
Hendry, Forbes
Macpherson, Niall (Dumfries)


Cordeaux, Lt.-Col. J. K.
Hicks Beach, Maj. W.
Maginnis, John E.


Corfield, F. V.
Hiley, Joseph
Maitland, Sir John


Costain, A. P.
Hill, Dr. Rt. Hon. Charles (Luton)
Markham, Major Sir Frank


Coulson, J. M.
Hill, Mrs. Eveline (Wythenshawe)
Marples, Rt. Hon. Ernest


Crosthwaite-Eyre, Col. Sir Oliver
Hill, J. E. B. (S. Norfolk)
Marten, Neil


Cunningham, Knox
Hirst, Geoffrey
Mathew, Robert (Honiton)


Curran, Charles
Hobson, John
Matthews, Gordon (Meriden)


Currie, G. B. H.
Holland, Philip
Mawby, Ray


Dalkeith, Earl of
Hollingworth, John
Maxwell-Hyslop, R. J.







Maydon, Lt.-Cmdr. S. L. C.
Rawlinson, Peter
Thatcher, Mrs. Margaret


Mills, Stratton
Redmayne, Rt. Hon. Martin
Thomas, Leslie (Canterbury)


Montgomery, Fergus
Rees, Hugh
Thomas, Peter (Conway)


More, Jasper (Ludlow)
Rees-Davies, W. R.
Thompson, Kenneth (Walton)


Morgan, William
Renton, David
Thornton-Kemsley, Sir Colin


Morrison, John
Ridley, Hon. Nicholas
Tiley, Arthur (Bradford, W.)


Mott-Radclyffe, Sir Charles
Ridsdale, Julian
Tilney, John (Wavertree)


Nabarro, Gerald
Rippon, Geoffrey
Turner, Colin


Nicholls, Sir Harmar
Robinson, Sir Roland (Blackpool, S.)
Turton, Rt. Hon. R. H.


Noble, Michael
Roots, William
van Straubenzee, W. R.


Nugent, Sir Richard
Ropner, Col. Sir Leonard
Vane, W. M. F.


Oakshott, Sir Hendrie
Russell, Ronald
Vaughan-Morgan, Rt. Hon. Sir John


Orr, Capt. L. P. S.
St. Clair, M.
Vosper, Rt. Hon. Dennis


Orr-Ewing, C. Ian
Scott-Hopkins, James
Wakefield, Edward (Derbyshire, W.)


Osborn, John (Hallam)
Shaw, M.
Walder, David


Osborne, Sir Cyril (Louth)
Shepherd, William
Walker, Peter


Page, John (Harrow, West)
Skeet, T. H. H.
Walker-Smith, Rt. Hon. Sir Derek


Page, Graham (Crosby)
Smith, Dudley (Br'ntf'd &amp; Chiswick)
Wall, Patrick


Partridge, E.
Smithers, Peter
Ward, Dame Irene


Pearson, Frank (Clitheroe)
Smyth, Brig. Sir John (Norwood)
Webster, David


Peel, John
Spearman, Sir Alexander
Wells, John (Maidstone)



Speir, Rupert
Whitelaw, William


Percival, Ian
Stevens, Geoffrey
Williams, Dudley (Exeter)


Peyton, John
Steward, Harold (Stockport, S.)
Williams, Paul (Sunderland, S.)


Pickthorn, Sir Kenneth
Stodart, J. A,
Wills, Sir Gerald (Bridgwater)


Pilkington, Sir Richard
Stoddart-Scott, Col. Sir Malcolm
Wilson, Geoffrey (Truro)


Pitt, Miss Edith
Storey, Sir Samuel
Wolrige-Gordon, Patrick


Pott, Percivall
Studholme, Sir Henry
Wood, Rt. Hon. Richard


Powell, Rt. Hon. J. Enoch
Summers, Sir Spencer (Aylesbury)
Woodhouse, C. M.


Price, David (Eastleigh)
Talbot, John E.
Woodnutt, Mark


Price, H. A. (Lewisham, W.)
Tapsell, Peter
Woollam, John


Prior, J. M. L.
Taylor, Sir Charles (Eastbourne)
Worsley, Marcus


Prior-Palmer, Brig. Sir Otho
Taylor, Edwin (Bolton, E.)
Yates, William (The Wrekin)


Proudfoot, Wilfred
Taylor, F. (M'ch'ter &amp; Moss Side)



Pym, Francis
Taylor, W. J. (Bradford, N.)
TELLERS FOR THE NOES:


Quennell, Miss J. M.
Teeling, William
Colonel Sir Harwood Harrison and


Ramsden, James
Temple, John M.
Mr. Chichester-Clark

Main Question put and agreed to.

Resolved,
That this House takes note of the White Paper on Public Investment in Great Britain (Command Paper No. 1522).

HOUSE OF COMMONS DISQUALIFICATION ACT, 1957

10.10 p.m.

The Financial Secretary to the Treasury (Sir Edward Boyle): I beg to move,
That the First Schedule to the House of Commons Disqualification Act, 1957, in its application to this House, be amended as follows:—

1. In Part I (Judicial Offices)—
(a) the offices of National Insurance Commissioner for Northern Ireland and Deputy National Insurance Commissioner for Northern Ireland shall be added; and
(b) the offices of Umpire and Deputy Umpire appointed for any of the purposes of the National Insurance Acts (Northern Ireland), 1946, or for the purposes of the Family Allowances Act (Northern Ireland) 1945, shall be omitted.

2. In Part II (Comissions, Tribunals and other bodies of which all members are disqualified)—
(a) the British Film Fund Agency shall be added;

(b) the Central Land Board, the National Arbitration Tribunal (Northern Ireland) and the Panel constituted for the purposes of the Industrial Disputes Tribunal under the Industrial Disputes Order, 1951, shall be omitted.

3. In Part III (other disqualifying offices), the following offices shall be added—
(a) Chairman of the National Institute for Research in Nuclear Science;
(b) Director nominated by the Secretary of State of any limited company in respect of which an undertaking to make advances has been given by the Secretary of State under section two of the Highlands and Islands Shipping Services Act. 1960, and is for the time being in force;
(c) any salaried officer appointed under the Births, Deaths and Marriages Registration Act (Northern Ireland) 1956, and not now specified in that Part;
and the office of Director nominated by the Minister of Transport of David MacBrayne Limited shall be omitted.

The object of this Motion is to seek approval of this House to the Amendment by Order in Council of the First Schedule to the House of Commons Disqualification Act, 1957. As the House will recall, the broad purpose of that Act was to bring together into one Measure all the various statutory provisions which disqualify from membership of the House of Commons the holders of offices of profit under the


Crown. The First Schedule to the 1957 Act lists those specific offices which disqualify from membership of this House and, as adopted by the Third Schedule, of both Houses of the Parliament of Northern Ireland.

Section 5 (1) of the 1957 Act provides for the Schedule to be amended by Order in Council in accordance with a Resolution of the House of Commons or of both Houses of the Parliament of Northern Ireland. So far, no such Order has been made. Most of the changes in disqualification since 1957 have been made by Statute, by the inclusion of an appropriate Section in the Acts creating new offices, or changing existing ones, which had the effect of thereby including those offices in the Schedule to the 1957 Act.

Some offices, however, have been created otherwise than by Statute, the holders of which ought, under Government policy—and I think this policy is generally agreed to and accepted by the House—to be disqualified from membership of this House of Commons. For example, the office of Chairman of the National Institute for Research in Nuclear Science was created by a Royal Charter which expressly precludes the appointment of a Member of Parliament as Chairman. Other offices have been abolished, and so ought, by rights, to be removed from the Schedule to the Act.

The draft Order in Council includes ten items affecting membership of the House of Commons, four of which have arisen in Northern Ireland, and six items which affect membership of the Northern Ireland Parliament. A separate Motion in respect of the items which affect membership of the Northern Ireland Parliament will be moved in the Senate and House of Commons there. For technical reasons, the Order must take the form of providing for the making of a verbal Amendment to the Schedule, but the effect of the Order and the Resolutions will be the same. I hope that, with that brief explanation, the House may be ready to approve this Motion.

10.13 p.m.

Sir Frank Soskice: The Minister did not explain why the last office is now to be omitted from the Schedule, and I should be grateful if he would give some reason. I do not say

that there is no reason, but the matter at the moment remains somewhat unexplored and I think that the hon. Gentleman should say why that office is now to be left out. Subject to that, and speaking for myself, I certainly would have no objection at all to the proposed changes in the Schedule.
When one looks at the Order Paper, prima facie the procedure proposed seems surprisingly alarming, a procedure to amend an Act of Parliament by Motion of this House. I do not say that it is wrong—it is specifically provided for by Section 5 of the 1957 Act—but I would have thought that a procedure which is well adapted to changing the Schedule from time to time.
Section 5, of course, also provides that in any future versions of the 1957 Act the alterations that are proposed by this Motion have to be incorporated. The object of that is to ensure that the Schedule shall at any time be kept up to date, so that those who hold offices, or propose to accept appointments that are offered to them, will know perfectly clearly whether or not that would involve disqualification from this House.
I think that is a procedure which works well, on the whole, and that the 1957 Act is useful in that it introduces clarity and precision into an area of our law which was very doubtful before the Act was passed. I would not oppose this Motion; indeed, I would gladly accept it subject to the Minister giving a reason for the exclusion of the last office which appears on the list.

10.16 p.m.

The Lord Advocate (Mr. William Grant): As this is a Scottish point, perhaps I may be allowed to reply. What is happening is this: under the Order we are adding, under paragraph 3 (b), a
Director nominated by the Secretary of State of any limited company in respect of which an undertaking to make advances has been given by the Secretary of State under Section two of the Highlands and Islands Shipping Services Act, 1960,…
And we are taking out the office of Director
…nominated by the Minister of Transport of David MacBrayne Limited. …
The Secretary of State will be giving an undertaking in regard to advances to companies other than David MacBrayne


and we are changing the Order to bring it into line with the terms of the Highlands and Islands Shipping Services Act, 1960.

Mr. E. G. Willis: Can the right hon. Gentleman say what will happen between the passing of this Motion and the passing of the Motion which will be necessary in respect of the proposals of the Secretary of State regarding the Orkney and Shetlands Shipping Line and also the MacBrayne Shipping Line, because, so far as I know, nothing has been laid before the House affecting MacBrayne's Line and, until that is passed, this office surely is not changed?

The Lord Advocate: I understand that an undertaking will be given at a very early date. The hon. Gentleman will realise that this Motion does not take effect until an Order in Council has been made.

Question put and agreed to.

Orders of the Day — HEALTH VISITORS AND SOCIAL WORKERS TRAINING [MONEY]

Resolution reported,
That, for the purposes of any Act of this Session to establish two Councils with functions relating to the training of health visitors and social workers and to extend the powers of the Minister of Health, the Secretary of State and local authorities with respect to research into matters of social welfare, it is expedient to authorise—

(a) the payment out of moneys provided by Parliament of the expenditure incurred by the Councils and Scottish Advisory committees appointed under that Act and of remuneration and allowances respectively to the secretary and members of those committees;
(b) the payment out of moneys provided by Parliament of any expenses incurred by the Minister of Health or the Secretary of State in promoting research into any matter relating to the functions of local authorities under Part III of the National Assistance Act, 1948, and, in particular, in participating with or assisting other persons in conducting such research;
(c) any increase attributable to the said Act of this Session in the sums payable out of moneys provided by Parliament by way of Rate-deficiency Grant or Exchequer Equalisation Grant under the enactments relating to local government in England and Wales or in Scotland; and
(d) any increase in the sums payable out of moneys provided by Parliament under the said enactments in respect of general grants which may arise from the inclusion, in the expenditure relating to the fixing of the aggregate amounts of those grants, of expenditure under the said Act of this Session.

Resolution agreed to.

Orders of the Day — CONSOLIDATION, ETC., BILLS

Lords Message [23rd November] communicating the Resolution, That it is desirable that, in the present Session, all Consolidation Bills (whether public or private), Statute Law Revision Bills and Bills prepared pursuant to the Consolidation of Enactments (Procedure) Act, 1949, be referred to a Joint Committee of both Houses of Parliament, to be considered forthwith.—[Mr. E. Wakefield.]

Lords Message considered accordingly.

Resolved,
That this House doth concur with the Lords in the said Resolution. —[Mr. E. Wakefield.]

Message to the Lords to acquaint them therewith.

Orders of the Day — FURTHER EDUCATION

10.20 p.m.

Dr. Barnett Stross: I beg to move,
That an humble Address be presented to Her Majesty, praying that the Further Education (Local Education Authorities) Amending Regulations, 1961 (S.I. 1961, No. 1582), dated 15th August, 1961, a copy of which was laid before this House on 22nd August, in the last Session of Parliament, be annulled.
Examination of the actual Statutory Instrument shows that the relative section—the one that should be looked at in the first place—is paragraph 3. This states:
Regulation 10 of the existing regulations, relating to Approval of Courses, shall have effect with the substitution in sub-paragraph (b) of paragraph (2) for the words 'a National Diploma in Design' of the words 'a Diploma in Art and Design'.
This means, therefore, that the purpose of this Instrument is to change over from the original N.D.D.—or National Diploma of Design—to a differently named diploma to be called a Diploma in Art and Design. This appears simple, but, in effect, it means that radical changes are to take place.
I understand that each student must complete a pre-diploma course of training of approximately one year before presenting himself. In addition, each student has to be remarkably well qualified academically. He must offer himself as being in possession of five 0 level passes in the G.C.E. or an equivalent academic distinction. He will be accepted with two Advanced levels and two Ordinary levels or, if he has no Ordinary levels, he will be accepted if he has three Advanced levels and can prove that he has done some general reading and had a general education. The diploma course itself is now three years instead of two. I understand that four areas of specialisation are envisaged, but that the principal and central theme, the theme which is obligatory to all students, will be the area of the fine arts—painting, sculpture and so on. The others will be graphic design, three-dimensional design and graphic design in textiles and fashion, so I understand. The essential feature which interests me at the moment is

that the central theme, as it were, is fine art.
Throughout the House, I think, the general view will be that these changes envisaged represent a definite step forward, and the principle behind the Statutory Instrument should be welcomed. If I have some reservations, I have them because I wish to ask for certain assurances and, perhaps, further information from the Parliamentary Secretary than is available to me. Broadly, I have three questions to ask.
Having studied what documents I have been able to find in the matter, particularly, of course, the advice given to the Minister in the First Report of the National Advisory Council on Art education, I find that there may well be some students of outstanding artistic promise who may, unless each case is carefully examined on its own merits apart from academic distinction, be debarred either from taking the advanced course or from receiving the diploma because they have not been able to obtain the necessary academic qualifications.
The National Advisory Council in paragraph 8 of its Report has stressed this very point. I hope that the Parliamentary Secretary will say that he fully accepts that every student's claim shall be individually examined. After all, we know that some young people, however gifted in a certain direction they may be in the arts, may be academically unruly, to call it that, or academically unfit to sit for this sort of examination. Their gifts may, nevertheless, be great indeed. Perhaps, in days gone by, although Leonardo da Vinci could well have said, "I can offer you seven A level passes, if you want them, at a moment's notice," others like Van Gogh and Rembrandt would have felt a little embarrassed and unwilling to sit down and study to the same extent.
We are by this Statutory Instrument which changes the course and makes it more advanced raising the standard considerably because we are looking forward to having first-rate teachers and designers for industry trained to the highest possible standard. These are the two main purposes, but also a number of the people so trained will devote the whole of their life to the


fine arts. This is what we hope will happen.
Our best teachers, and certainly the very best facilities, will be made available at these special art institutions, these art schools, which will have to have their standards raised both in the provision of facilities and in the quality of teaching. They must have their standards raised to be able to cope with this and to make it possible for students to qualify in this advanced diploma.
There will not be so many of these institutions. Inevitably, they will not all be able to be brought up within the foreseeable future to the standard to which the best must be brought up. Therefore, pressure will be brought upon those who wish to obtain the best possible teaching. Again, I would like the Parliamentary Secretary to say that irrespective of academic distinction, if there is special ability in the fine arts in a student, his case will be sympathetically considered.
Secondly, I believe that there are 120 to 130 schools of art in Britain. How many does the Parliamentary Secretary think will be able, with all the help that it is proposed to give them, to qualify to afford in full the facilities for training for an advanced diploma of this type? Will it be thirty or forty? My view is that it is not likely to be more for many years to come.
A secondary question must be: what will happen to the other schools that cannot satisfy the Minister of the required standard? What is proposed to be done for them? The Parliamentary Secretary may answer in the words of Circular 16/10, sent out by his right hon. Friend on 21st November last year to local authorities, explaining the regulations and what he intended to do. I quote only the last two or three lines from paragraph 8 of the Circular:
The Minister welcomes the Council's observations on the place of the art school in the community and the emphasis which the Council puts on the development of part-time vocational and non-vocational work; he believes that this is a field of work in which all schools of art and art departments of colleges of further education have a useful part to play.
If that means anything, it should mean that the Minister will accept every art school, including those schools which cannot qualify or may not qualify for many years as being instruments of

culture and of real use to the community, giving inspiration and fulfilment to people of all ages, probably mostly part-time, as a true instrument of education and not ignore or neglect these schools.
My third and last point is to speak about provisions. We will be faced with the fact that new building will be necessary, and it will have to fall into two types: accommodation for training and residential accommodation for the students. If there are to be only twenty, thirty or forty such schools in Great Britain, students who wish to take the courses will have to travel to them. If the distance is too great they will have to be in residence. I know that the Minister and the Parliamentary Secretary have taken advice from the Council and that residential accommodation is to be made available.
We have completed today a debate on capital investment. This proposal also will require capital investment by way of building. Can we have an assurance that it will not be deferred or whittled down? It would be a great pity if that were to happen when we are planning to educate and train the best of our gifted young people in design for factories and for industry generally. It is most lucrative for any country to turn out designers of the high quality we here envisage.
I hope that the Parliamentary Secretary will say something about the finance that will be provided, whether it will be much, and when it will begin to be made available. If he can satisfy us on these two simple points we shall be glad to withdraw the Prayer and wish him the best of luck in going forward with this scheme.

10.31 p.m.

Mr. James Boyden: In supporting my hon. Friend the Member for Stoke-on-Trent, Central (Dr. Stross), I should like to ask the Parliamentary Secretary to throw some light on two effects of these Regulations. As my hon. Friend has said, one of the regulations will shut down a considerable number of courses and the recommendation of the First Report of the National Advisory Council on Art Education is that if the numbers attending a course are less than twelve the course should be shut down. I ask the


Parliamentary Secretary whether he will be very lenient for a time in the rural and scattered areas where it is difficult for students to travel and they are more likely to go into residence.
I ask him to take note of paragraph 43 of the Coldstream Report which recommends that
the Minister should apply his requirements sympathetically in borderline cases so long as there is a prospect of an early increase of the student roll to a satisfactory level.
He should be tolerant of a course which is going well even if the numbers are below those specified and should give these districts a chance to organise themselves and pull up.
One of the difficulties of this age is the concentration on big towns. I represent a scattered area where education is extraordinarily difficult for young people living in the Dales. A train has ceased to run and students have been deprived of evening classes because they cannot get home. I ask that special attention should be given for the time being at any rate to the rural areas.
As to that part of the regulations designed to encourage the study of art on a part-time basis for the benefit of the community as a whole, the Coldstream Report says that
adequate facilities should be provided for part-time courses.
Where there is a centre which the Minister has to close down ultimately because the numbers attending the diploma course are inadequate, the good will in that area should be channelled and used to encourage part-time courses. I was rather disappointed that in these new arrangements there is no reference to architecture. One of the weaknesses in the artistic atmosphere of this country is the lack of popular appreciation of architecture and the lack of teaching on the subject in our schools. Though I feel that it is out of order, I hope that that point will be noted.

10.35 p.m.

Mr. Frederick Willey: It seems to me that the Parliamentary Secretary is about to give a sympathetic reply, and so I will not hold my usual reserve position of speaking after him.
I congratulate my hon. Friends the Members for Stoke-on-Trent, Central

(Dr. Stross) and Bishop Auckland (Mr. Boyden) upon raising this subject, and I wish the diploma well. We hope that the diploma will establish itself.
One of my hon. Friends has just spoken about the undesirability of concentration. We cannot avoid some measure of concentration here because we are hoping that the diploma will be comparable with a university qualification. We want the diploma to be recognised; we want it to be of high standard.
We are here, however, dealing with an extraordinarily difficult sphere of education, and I hope that every effort will be made to do what we can to encourage and make enthusiastic the teaching staff who will be responsible for teaching those who take the diploma. I can think of no more difficult subject than the teaching of art. I accept the general approach of the Coldstream Report, that there should be a concentration upon fine arts. I do not complain of the proposal that 15 per cent. of the teaching time should be devoted to the history of art. We want some measure of academic approach to art, but at the same time we must all the while appreciate that this is a subject which depends very largely on individual initiative and inspiration, and we must seek out these exceptionally talented people and ensure that they have their opportunity. That is why we have to depend very largely on the teaching staff.
I have not any very strong views about the forms that art takes from period to period. However, last year I was in Paris for a few weeks pursuing modern art. Paris has an enormous advantage here, in that there is a spirit about it that enables artistic enterprise to flourish. I should like more of that at home. We certainly have very fine art collections here, I hope that the diploma and the greater recognition that we give it will help.
Apart from that, I should like to emphasise the point that both of my hon. Friends have made about buildings. I know the difficulties of the Parliamentary Secretary at the moment. We merely wish to help him, and I am sure that he is anxious to be helped. I think that we should, again, accept the concept of the Coldstream Report, that the art school should be a local centre of cultural activity. This means, apart


from the diploma course, that we want part-time activities and a public interest in the arts encouraged through art colleges.
I know that the Parliamentary Secretary will be anxious to winkle money out of the Treasury if he can. I hope he will not relax his efforts to see that this purpose, against the Coldstream Report, is supported, and that he will do so whenever he has an opportunity. This is the essence of the quality of living. This is the way to tackle the problem, to see that we have in, say, Sunderland an art school which not only is giving those who are exceptionally talented and those who are artistic an opportunity to pursue their talents but is also a focal point of cultural and artistic endeavour.
I and my hon. Friends welcome these Regulations and wish the diploma well.

10.39 p.m.

The Parliamentary Secretary to the Ministry of Education (Mr. Kenneth Thompson): I am sure that the whole House is grateful to the hon. Member for Stoke-on-Trent, Central (Dr. Stross) for taking the opportunity to bring up what is, in fact, a very important aspect of our affairs which may very easily become overlooked in the great rush of other important matters which occupy so much of our time and thought.
I should like, on behalf of the House, to thank the Coldstream Committee and also the Summerson Advisory Council for the work that they have done so far in making it possible for us to reach the stage of tabling these Regulations. If our art education is to reach the standards that we all desire, it is essential that it should reach a coherent high level, understood by all and recognised as an objective towards which all interested in art education can work, and that is what the Summerson Council now proposes to help us to do.
These Regulations are very simple and do nothing more than change the name of the diploma towards which the students will work, but the House may like to be brought up to date with the background to that change. The Advisory Council recommends the establishment of this new art diploma system to replace the present system. All being well, it is hoped that the courses for

the new diploma will start in 1963, leading three years later to the first awards of the diploma in art and design, as described in the Regulations. Some students will continue to work out the courses that they are following for the existing diploma, but it is necessary at this stage to introduce an approval condition for courses leading to the new diploma.
The hon. Member for Stoke-on-Trent, Central described with great precision the kind of courses that will be followed by those who seek to qualify for this diploma, and I will not repeat them. But I think I ought to answer the specific questions which he raised, and particularly that one which, I know, he regards as most important and which is as near to controversy as anything is in this matter—the question of what is to be the accepted academic level that a student must achieve before he or she can be admitted to this course in art and design.
This is a difficult matter. Quite clearly, if we are to enrol students and train them to a point at which they will take a diploma which, we hope, will be a degree equivalent and will carry with it all that that means in recognition for qualified teacher status, recognition for entry into further stages of perhaps professional training and so on, there must be some recognisable and accepted academic standard that those students must be able to achieve.
I do not know whether everyone would go with the hon. Member in describing a student with five O-levels as "academically remarkably well qualified." I should have thought that that was a reasonably modest standard to ask of a student to pursue a degree equivalent course in almost any art or science, but I do not want to quarrel with the description of five O-levels as being academically remarkably well qualified. Happily, of course, increasing numbers of our students are reaching that level.

Dr. Stross: I cannot help but remember that one of the most delightful painters still living in this country—he paints very beautifully and will not mind my mentioning his name—is Lowry, whose work we all like very much. However, I wonder what he


would say about five O-levels before he was allowed to go to a decent school to learn how to paint.

Mr. Thompson: The Parliamentary Secretary himself is not going to make any ambitious claims about his own academic standard, particularly when related to O-levels. I will come to the specific point of a Goya or Lowry in a moment. I think that hon. Members will agree that we ought to write into the Regulations an acceptable academic standard.
We then come to the question of what is to happen to those who have these other strange qualities which are not so easily definable, which are not so easily capable of precise description, and which are not so easily recognisable in an interview or examination room. Here is a major difficulty recognised by the Coldstream Council and by the Summerson Advisory Council and by my right hon. Friend. We must have a process by which it is possible for the door to be kept open for such students, and we propose to provide a system of exceptions from the five O-levels rule so that by whatever proces of reasoning and consideration the colleges themselves think appropriate, the student who has this magic can be admitted into the colleges.
I would not be so optimistic as to suppose that there will never be a door slammed in a worthy face—it is a little difficult to see how that could possibly be avoided—but I am sure that the colleges themselves will regard it as part of their duty to see that where there is talent, and perhaps latent genius, waiting to get in and be developed, it will not be a mere piece of machinery that will stand in the way. I hope that with that assurance the hon. Member will feel that the point is taken and that, so far as it can be given precision, there will be a way for those students to find their places in the colleges.
Perhaps I should add a word about the end of the course. It is not suggested that there will be some central examination that the students leaving the colleges should pass, but clearly there must be an examination if we are to have a recognised standard at the other end of a course. The colleges will make their own examination arrangements, under supervision of the Advisory Council, and

will be required to appoint external assessors; so that we may rest satisfied about the processes for ensuring that the examinations at the end are about right.
The hon. Member wanted to know what will happen in the process of picking out the schools which are to be the colleges which will offer these courses, and what will happen to those schools which are not brought into this designation. I have no idea—and the Summerson Council itself has no precise idea—of the number of colleges equipped and qualified to offer courses of this level. I do not think that I would help the House by making a guess. What has already happened is that the colleges have received a circular from the Advisory Council, and those circulars are due to be returned to the Summerson Council and to my right hon. Friend—a copy each—by 31st December. Then will start the business of inspecting, testing and examining the courses of the colleges; and looking at the strength of student enrolments to see whether they reach a suitable number—and here I will take up the point made by the hon. Member for Bishop Auckland (Mr. Boyden)—so that the Summerson Council, in cooperation with my Department, may draw up a plan representing a coming together in suitable and convenient centres of students who will make up courses strong enough numerically to achieve the standards we desire.
The result of this procedure will be the designation of the colleges which will offer these courses. I have no idea what the number will be. Then there will be the remainder, and I do not know what that number will be. What we want to be sure of is that the resources of these other schools—at present most of them offering a course leading to the National Diploma in Art and Design, which is the existing diploma—are not wasted. Indeed, we want to see that the spare capacity—if I may use the phrase—thrown up by this change in the system is used to the greatest possible advantage.
There is clearly an overwhelming demand for the setting of better standards of design and taste, and of judgment of what is good and what is bad. I go a long way with the hon. Member in thinking it a pity that we do not do something more to bring these same


standards to bear in our judgment of what is good and what is bad architecturally—but that is a long story, and I suspect that I would almost certainly incur your disfavour, Mr. Deputy-Speaker, if I pursued it. But we want the colleges that do not achieve designation to strengthen their full and part-time vocational and non-vocational courses so that over the years they will serve the best possible standards of art education.
There will be cases where students will find themselves some distance inconveniently away from the courses that they want to pursue. I should have thought that this was strictly a local authority matter. A local education authority has, of course, a duty to perform in seeing that it makes possible the pursuit of learning, including this kind of learning. In those cases where difficulties are faced which are beyond the resources of the individual student, then the local authority should devise means of coming to his aid.
I do not think that it will be the fault of the Ministry if courses are not reasonably convenient to the overwhelming majority of students. Some of the students who will pursue courses at the designated colleges leading to the new National Diploma will, of course, be a long way from home, just as ordinary university students are a long way from home.
And here I come to the third of the hon. Gentleman's questions. It will be necessary for them to live away either in lodgings or in halls of residence. There is going to be a fairly considerable building programme involved in making sure that the designated colleges are of a kind and equipped to a level that will enable them to provide these courses.
My right hon. Friend has assured the House on previous occasions that we want to see that the capital investment programme allows us to make the necessary provision for these courses. I am not able to say at the moment what the need will be in terms of money, nor can I say whether all the money that is going to be asked for will be immediately available. This is one more example of the question of priorities within priorities that will haunt our lives and pursue us down all these avenues of desirable achievements. We shall do our best to see that the money is there

for this purpose. We may have to put halls of residence into a lower order of priority than the lecture halls and other teaching facilities that are essential to the courses. We shall try to get this right as well in due course.
It seems to me that the proposals now going forward offer us a chance to get our art education on to a very high level indeed and to provide avenues of advancement for those who have the necessary basic talent. I very much hope that the House will feel that we are on the right lines and that there is no need for us to accept the hon. Gentleman's invitation to pray against the Regulations.

Dr. Stross: If the House will permit me, I beg to ask leave to withdraw the Motion.

Motion, by leave, withdrawn.

Orders of the Day — METHANE

Motion made, and Question proposed, That this House do now adjourn. —[Mr. Whitelaw.]

10.57 p.m.

Mr. James Boyden: On 20th November the Minister of Power stated in answer to my Question No. 17 about the importation of methane that he regarded it as his duty to give information where his responsibilities were involved, but that these responsibilities did not extend to the commercial arrangements reached by the nationalised gas industry.
It is a most extraordinary situation where a Minister of Power encourages one nationalised industry to compete with another and then refuses to publish most of the facts by which it is possible to judge the wisdom of this competition. At this late hour I have not the time to challenge the whole concept of the Electricity, Gas and Coal Boards competing against each other in order to provide cheap fuel at the expense of the mine worker and, ultimately, against the public interest. But on this specific issue—the importation of methane from the Sahara—the Minister has not disclosed enough information to enable us to judge the economic wisdom of a decision which he agrees is entirely within his area of responsibility.
May I ask, first, whether he will disclose the full effect of the Gas Council's plans on the balance of payments situation? That the full utilisation of our coal resources will improve the balance of payments no one can deny. That the importation of oil costs us foreign currency no one can deny, although the extent of the damage cannot be known while the Government refuse to publish the figures. How much will this new development in methane importation aggravate our balance of payments difficulties?
The methane is to be brought from the Hassi R'mel field in the Sahara. Who owns this field? How will the Gas Council pay for the gas, and to whom will it make the payment? The gas will go through an existing main to Port Arzew. How is payment made for this service and to whom? It is then to be liquified by a part American, part Anglo-Dutch concern, the Compagnie Algérienne de Méthane Liquide, a company in which British control will be very slight.
Even the two 28,000-ton tankers to be employed are to be designed and operated by concerns dominated by American and foreign capital. It is true that the ships will be built by Vickers at Barrow and Harland and Wolff at Belfast, but everything else could be controlled abroad. Thus the ships will be chartered from a United Kingdom subsidiary of Conch International Methane Ltd., owned 40 per cent. by Royal Dutch Shell, 40 per cent, by Continental Oil and 20 per cent. by Union Stock Yard and Transit Co. of Chicago; and in the transportation of the gas the Gas Council will own only half of the capital.
At five stages in the process of getting the gas from Hassi R'mel to Canvey Island there is to be a commercial rake-off by operators in no way concerned with the interests of the British public; at most points there may be a payment of foreign currencies, and at any one point there is a risk of political disturbance which could wreck the whole complicated scheme. How much will these contracts affect our balance of payments?
Even on the grounds advanced by the Gas Council, the cheapness of the im-

portation of the methane may well prove to be illusory. The Gas Council estimates that the methane will cost 8½d. a therm. The National Coal Board expects that gas made by the Lurgi process will cost 8¼d. a therm.
The methane contracts are subject to two grave risks on which the Parliamentary Secretary should comment. The Algerians will receive 1d. out of every 8½d. spent on the gas. What are the rates of pay of the manual workers in the methane fields, in the liquefaction plants, in the docks? Are these workers now organised in trade unions? How long, in the present African situation, will they put up with their low wages and inferior position? And if in due course they secure a substantially better standard of living, how will this affect the price of the methane?
Is this a Common Market rehearsal—the Gas Council using cheap African labour to threaten the National Union of Mineworkers? Rumours on the Continent about the impending devaluation of sterling are rife. What would be the effect of a 20 per cent. devaluation of the £ on the cost per therm of this imported gas? Comments on these two factors—much increased payments to the Algerian workers and the effect of devaluation—ought to be made by the Parliamentary Secretary tonight.
As to the political risks which may wreck the whole scheme, the Minister says that the Gas Council will make alternative arrangements if supplies are interrupted. Is it not probable that if supplies are interrupted they will be stopped permanently? If the Government could not make satisfactory alternative military arrangements for the Suez and Cyprus bases for several years, how can the hon. Gentleman expect the Gas Council to protect its extended and vulnerable lines of communication?
Would the Minister dispute the following observations: that at present no French banks are lending any appreciable sums for development in Algeria; and that the French are not themselves using any of this methane because of the political implications?

Mr. T. H. H. Skeet: Is it not true that the French are exploiting the Lacq natural gas deposits? They have a pipeline to Paris and


Lyons. They do not require gas by tanker meanwhile, because they have ample natural gas.

Mr. Boyden: They are not exploiting this source of gas. No other British companies are investing in the Sahara developments.
The Gas Committee of the Economic Commission for Europe has drawn attention to the lack of information about the effect of corrosion and low temperatures on material used in tankers. A new problem is being presented to the shipbuilders. The risk of corrosion caused by sulphur in the gas is said to be high. Is it a fact that insurance underwriters have insisted that the Gas Council has itself got to carry this risk? Quite apart from the commercial liability involved, what is the degree of risk involved for the seamen? Has the National Union of Seamen been consulted?
The Gas Council and the Government have a curiously ambivalent attitude to the shipping problem. They will provide £7 million at Barrow and Belfast for ship construction, but have the tenders for these two ships gone out to competitive tender, including foreign yards, and were the tenders of Vickers and Harland and Wolff the lowest? Is there a hidden subsidy for British shipping whilst the Gas Council will take the most competitive product it can get for itself? Who pays for the damage to our coastal shipping which will involved when 800,000 tons of coal are not carried from the North-East and Scotland to Canvey Island? Competition seems suitable medicine for the miners and coal shippers but not for shipbuilders and the Gas Council's friends.
The Minister has stated more than once that if methane were not imported oil products would be. If the Government are determined to ride rough-shod over the British miners anyway, why not import liquid petroleum gas from British refineries? These hydro-carbons are more easily obtainable and are cheaper than methane, which takes three times as much tanker space as oil of the same thermal content.
But the heart of the matter is the sudden decision to allow the Gas Council to sign the new contracts when

the Lurgi report is nearly ready. Why did the Minister not tell the Gas Council that he would come to a decision on the signing of the contracts when the Lurgi report was ready? The Gas Council has been taking its time about finishing the report. I understand that it has only one technical officer dealing with the matter. Perhaps the absence of appropriate technical staff in his own Ministry is a weakness which has delayed the Lurgi report.
But, in any case, it would surely have been prudent to have waited a little longer, in a matter of such grave importance, before coming to a decision. At the very least, the Minister owes it to the House to publish the full facts—commercial, economic and political.
The Minister denied that this move by the Gas Council will cause 2,500 miners to lose their jobs. My guess is that the psychological effect will cause 2,500 miners to leave their jobs and aggravate the already difficult labour position between different mining areas. Moreover, in future what is to prevent the Gas Council from doubling the importation of methane when it suits it and cause more unemployment and more alarm and despondency among miners?
The Government's appointment of Lord Robens to the N.C.B. was an imaginative act. Their flouting of his views over such an important issue as this does not make sense. The Minister has made a grave mistake and has a great deal to explain away.

11.3 p.m.

Mr. A. Bourne-Arton: The hon. Member for Bishop Auckland (Mr. Boyden) is normally second to none in his championship of the interests of the North-East. Perhaps it was shortage of time which prevented him from referring to one matter closely affecting the commercial and employment position of the North-East with which this question is concerned. A great number of engineering and shipbuilding firms in the North-East expect and hope to get a fair share of the very many millions of pounds worth of business which this decision will make available to somebody. In my constituency we hope that we shall secure some part of this very big business. The


highly sophisticated and modern engineering firms in the North-East are certainly not dismayed at the prospect of providing the containers, pressurisation machinery, refrigerating machinery and indeed shipbuilding machinery which this decision of the Government will put in somebody's way, and we have good reason to hope in ours.

11.5 p.m.

The Parliamentary Secretary to the Ministry of Power (Mr. J. C. George): The hon. Member for Bishop Auckland (Mr. Boyden) has asked a large number of questions, many of which are well outside the scope of my right hon. Friend's responsibilities. With regard to the question of commercial agreements, this is no new arrangement adopted by a Minister towards the nationalised industries. It has never been the practice, and I hope that it never will be, for the Minister to reveal here the internal commercial arrangements of the various boards. Those are the property of the boards and the business of the boards, and my right hon. Friend was absolutely right, and in line with past practice, in refusing to disclose them.
The hon. Member was exercised about the problems of the balance of payments, although he later disclosed the knowledge that if the importation of methane had not been permitted the Gas Council would certainly have turned to other oil products, and the effects on the coal industry would have been the same. The Gas Council is searching for a cheaper therm, and the Select Committee has said that time is not on the side of gas. Therefore, had the importation of methane been refused, something else would have taken its place by way of the importation of petroleum products. While there is a balance-of-payments factor, that element would not have disappeared.
The hon. Member referred to conditions inside the supplying area. Those are not, and cannot be the province of my right hon. Friend. He has taken the best advice obtainable about conditions in the area, and he was frank with the House and said that this proposition was not without risk. He also told the House quite clearly that the design of the scheme, applying as it

does to seven area boards, carried with it the minimum of risk. He said that only 10 per cent. of the output of the gas industry would be involved. That 10 per cent. would be spread over seven area boards, so the element of risk in any area board would not be high.
If the supplies were interrupted temporarily, or even over a prolonged period, there is no reason to think that the public would be in any way inconvenienced. Standby plant would be used, and the methane-processing plant could also be set to use other petroleum products. There are, therefore, adequate safeguards against interruption of supply to our consumers.
The hon. Gentleman asked about the wages of the Arab population. That is a rather curious question to ask here if one really expects a reply. We have no access to information about the level of wages in that area or to the state of trade union organisation there, but it would be very strange if the discovery of a new and important gas did not have a substantial effect on the living conditions of the people around its source—

Mr. Boyden: But we have commercial attachés and consuls who are expected to have this sort of information, and be able to form a judgment of the viability of commercial propositions of this kind. Surely, that is something the Government ought to know.

Mr. George: That is not the business of the Ministry of Power. If the hon. Gentleman wants information about conditions in the interior, he should ask the proper Ministry. It is certainly not our business to know these things. I repeat that it would be a peculiar happening if this important discovery did not have some effect on the living conditions of the people concerned.
The hon. Member then asked why we did not await the decision of the study group, and that is quite a sound question. My right hon. Friend has on numerous occasions told the House that these two processes—methane importation and Lurgi gasification—are not opposed. They are not alternatives. There is room for both. This scheme for the importation of liquid methane is a very sound scheme which was available within a reasonably short time at costs which were acceptable. It is


technically advantageous beyond all other alternatives and is, in every way, an acceptable scheme employing a process already proven and thoroughly satisfactory to my right hon. Friend.
My right hon. Friend has never considered—and does not now consider—that the study of the Lurgi proposition is in any way prejudiced by the fact that permission has been given to import methane. The Study Group will report, within a few months we hope, and then—and only then—will we have any idea about the price at which the Group considers that the Lurgi plant can supply gas to consumers in this country.
The hon. Gentleman gave figures which are, of course, not applicable to what the Study Group has before it. These figures have not yet been assessed and cannot be known. The hon. Gentleman asserted that methane would cost 8½d. In fact, that figure is quite wrong because in considering the cost of gas even a very little saving means a great difference in price. It will be supplied to the boards at 7½d. per therm. There will be a ½d. rebate from the Council's half share in British Methane Limited, which hires the tankers, and that ½d. will be passed back to the area boards, and the net price will be 7d. Reformed into town gas it will cost 8¼d., but quite a large percentage will be used, we hope, for enriching Lurgi gas and the proportion used for that purpose will be supplied at 7d. per therm. The proportion of methane in the Lurgi gas will be 50 per cent.
In fact, the weaker Lurgi gas will be used to dilute the rich methane in order to make it a commercial proposition. Far from being a hindrance to the Lurgi proposal, the presence of methane in the vicinity, as it will be, will certainly be a help towards the Study Group favouring the Lurgi plant.
I can give the hon. Gentleman an assurance—which I have given before—that the Gas Council entered into this Study Group in all sincerity. It is anxious that the truth about Lurgi should be known, and I can assure the hon. Gentleman that if, in the end, Lurgi is shown to provide a cheap, competitive and safe method of generating gas, then the Lurgi plant will come into the boards' development plans. As

I say, the Gas Council is sincere in its purpose in this Study Group. If evidence shows that it is competitive, the intention is to include a large Lurgi plant in its development programme.
Methane importation is a great scheme. It is bold and imaginative, and it brings to this country an entirely new technology. It opens the door to a supply of energy from a wide source in the future. The Gas Council, by its early experiment with the "Methane Pioneer," proved that this liquified methane could be transported safely over long distances, something for which the Council deserves great credit, since it has never been done before.
Now two tankers are being built each to carry 12,000 tons of methane. The tankers are equal in dimension to normal 28,000-ton ships, and these are to be built in British yards at the request of the Gas Council. The British shipbuilding industry will thereby acquire a new technique which ought to give it some advantage over foreign shipbuilders if the use of methane expands in the future, as we hope it will. On the balance of payments question, therefore, this could be decidedly advantageous, and we hope that it will bring same work to the constituency of my hon. Friend the Member for Darlington (Mr. Bourne-Arton) when the developments take place.
While one can criticise the scheme in the way the hon. Gentleman did and question various provisions in the scheme, the Minister is content that the Gas Council, with its business acumen and commercial wisdom, has made arrangements which are sound. He is not in the slightest bit worried if, as the hon. Gentleman said, the French banks are not advancing money in Algeria. Nor is he concerned about other British companies not investing in Algeria, because the Gas Council has not a penny invested in Algeria. The whole of the Council's investment is in the United Kingdom. Its commercial acumen has been brought to hear to such an extent that others carry all the risk outside the United Kingdom. All the Council has at risk in this scheme is £18 million in storage tanks and pipe-lines. Even that is not the true figure, because 6 million pounds worth of plant which was previously planned will not,


in fact, be built. Therefore, capital expenditure due to this new venture will be £12 million inside the United Kingdom.
I hope that I have shown that this is a sound commercial scheme which will bring advantage to this country in several ways. It will give an opening to a new technology, it will provide cheaper gas for export industries, and give a chance to shipbuilders to compete on a privileged basis with foreign shipbuilders when, as we hope, this trade expands.
The Gas Council is entitled to a great deal of credit for all the foresight, vision and patience it showed during the long and difficult negotiations. The result has been a great upsurge in the morale of the industry, which has passed through a difficult period from the time of nationalisation until recently. This is the first ray of light this industry has seen, and the effect on the coal mining industry will not be serious but only marginal.
The Select Committee estimated that the consumption of coal by the Gas

Council might drop by 2 per cent., which is a very marginal effect. But even that was not quite fair to the gas industry because the Select Committee estimated a growth of 1 per cent. per annum in gas consumption. The area boards believe that with the help of methane, and with natural expansion, it will go beyond 1 per cent.
It is our hope that consumption of gas will expand, but the only hope of that, and of gas remaining an important customer of the coal industry, is to have the gas industry competitive. The way to have it competitive is to give it access to this new technology, to new supplies of this valuable and important material. That has now been done. We can await the result with confidence.
I repeat that the members of the Gas Council and the chairmen of the area boards merit a great deal of credit from this House for the courage, initiative and vision they have shown in this bold scheme.

Question put and agreed to.

Adjourned accordingly at nineteen minutes past Eleven o'clock.